LIBRARY 

OF   THK 

UNIVERSITY  OF  CALIFORNIA. 

« ri  R  r  OK 


Received 
Accession  No.  & 


,  i89£. 

.    (,'Ljss  No. 


REPORT  OF  THE   COMMISSION 


APPOINTED 


TO  INQUIRE  INTO  THE  EXPEDIENCY  OF  REVISING 
AND  AMENDING 


The  Laws  of  the  Commonwealth 
Relating  to  Taxation. 


« 

3SITY 


OCTOBER,  1897. 


PRINTED   FROM 

THE  PLATES  OF  THE  PUBLIC  DOCUMENT^ 
—  FOR  THE  — 

Massachusetts  Anti-Double  Taxation  Leagut 
,  No,  6,  "BEACON  ST. 


BOSTON  : 

WRIGHT  &  POTTER  PRINTING  CO.,  STATE  PRINTERS, 

18  POST  OFFICE  SQUARE. 

1897. 


C*_r-*- 


REPORT  OF  THE  COMMISSION 


APPOINTED 


TO  INQUIRE  INTO  THE  EXPEDIENCY  OF  REVISING 
AND  AMENDING 


The  Laws  of  the  Commonwealth 
Relating  to  Taxation. 


OF 

nj] 


OCTOBER,  1897. 


PRINTED   FROM 

THE  PLATES  OF  THE  PUBLIC  DOCUMENT 
— FOR  THE — 

Massachusetts  Anti-Double  Taxation  League, 
OmcE,  No.  6,  BEACON  ST. 

BOSTON : 

WRIGHT  &  POTTER  PRINTING  CO.,  STATE   PRINTERS, 

18  POST  OFFICE  SQUARE 

1897. 


61  iff 


TABLE    OF    CONTENTS. 


Page 

INTRODUCTION, 1 

PART  I.  — The  existing  tax  system, 3 

1.  Taxes  on  polls  and  property, 3 

The  poll  tax, 3 

The  general  property  tax,  exemptions, _5 

Taxes  on  real  property  and  mortgages, 7 

Taxes  on  personal  property, 8 

2.  Corporation  taxes, 13 

The  general  corporation  tax, 14 

Taxes  on  national  banks, 17 

Taxes  on  savings  banks, 20 

Taxes  on  trust  companies, 21 

Taxes  on  insurance  companies, 23 

3.  The  collateral  inheritance  tax, 24 

4.  License  fees, 26 

Fees  for  liquor  licenses, 26 

Minor  fees, 28 

PART  II.  —  The  working  of  the  existing  tax  system, 29 

Taxes  on  real  property, 29 

Taxation  of  farming  land, 30 

How  far  taxes  on  real  estate  are  shifted, 32 

Taxation  of  inortgages, 36 

The  taxation  of  personal  property, 40 

Sworn  returns, 41 

Amount  and  nature  of  personalty  taxed, 43 

Assessment  of  personal  property  in  the  cities, 46 

Assessment  of  personal  property  in  the  towns,         .                49 

Taxation  of  live  stock  and  vessels, 51 

Taxation  of  stock  in  trade, 53 

Taxation  of  machinery, 55 

Intangible  personal  property, 57 

Methods  and  results  of  assessment  and  estimate, 59 

Distribution  of  intangible  personalty  among  the  towns, 63 

Taxes  on  Massachusetts  corporations  and  banks, 68 

Savings  banks, 72 


iv  TABLE   OF   CONTENTS. 

Page 

PART  III.  —  Proposals  and  recommendations, 74 

The  single  tax, 74 

Exempted  institutions, 75 

Public  service  corporations, 76 

The  taxation  of  securities, 78 

Present  mode  of  taxing  foreign  securities  not  sound, 80 

Present  mode  of  taxing  securities  is  impracticable, 82 

A  State  income  tax  inexpedient, 85 

The  Pennsylvania  method, 88 

The  Connecticut  method, 90 

An  inheritance  tax, 92 

Expected  revenue  from  the  inheritance  tax, 98 

Distribution  of  revenue  from  the  inheritance  tax, 100 

A  tax  on  occupants  of  habitations, 104 

General  remarks  on  proposed  changes, 110 

County  expenses  to  be  assumed  by  the  State, 112 

Corporate  excess  to  be  applied  to  paying  county  expenses, 116 

Effects  on  the  State  finances 118 

General  summary, 120 

PART  IV.  —  Supplementary  report,  by  Hon.  ALVAN  BARRUS, 122 

Agricultural  towns, * 122 

Highways  and  abandoned  farms, 124 

Overvaluation  of  farms, 126 

Schools 127 

Less  extravagant  institutions, 129 

Advantages  and  neglected  resources, 130 

Administration  of  justice, 131 

Recommendations, 132 

MINORITY  REPORT,  by  GEORGE  E.  MCNEILL, 135 

Interpretation  of  the  resolve,   .        .        .        .        .        .        .        .        .        .        .        .  136 

Taxation  of  securities, 142 

Divided  taxes 146 

Distribution  of  county  expenses, 148 

Savings  banks, 150 

Exempted  institutions, 152 

Shifting  of  taxes, 152 

House  rental  tax, 153 

The  inheritance  tax, 155 

Intangible  personalty, 156 

Mortgage  exemption, 173 

State  assessment, 0 179 


TABLE  OF   CONTENTS. 


APPENDIX. 

APPENDIX  I.  _, 

Bills  proposed  by  the  Majority  of  the  Commission.  page 

A.  An  Act  imposing  a  tax  on  legacies,  successions  and  certain  other  transfers,    .  189 

B.  An  Act  imposing  a  tax  on  occupants  of  habitations, 201 

Bill  proposed  and  Paper  presented  by  the  Minority  of  the  Commission. 

C.  An  Act  to  provide  for  the  State  assessment  of  personal  property,      .        .        .  209 

D.  Paper  on  mortgage  rates 218 

APPENDIX  II.— Statistical  tables. 

Table  A.   Classification  of  personal  estate  as  valued  by  the  assessors  for  taxation  in 

the  towns, 223 

Table  B.   Classification  of  personal  estate  as  valued  by  the  assessors  for  taxation  in 

the  cities, 264 

Table  C.  Intangible  personal  property  in  the  cities  and  towns, 270 

Table  D.  Table  of  percentages, 291 

Table  E.   Effect  of  certain  proposed  readjustments  of  the  tax  system  on  three  classes 

of  localities 310 

Table  F.  Assessors  in  the  cities 314 

Table  G.  Distribution  of  the  general  corporation  tax, 318 


0f 


OFFICE  OF  THE  COMMISSION  ON  TAXATION, 

STATE  HOUSE,  BOSTON,  MASS.,  Oct.  1,  1897. 

To  His  Excellency  the  Governor  and  the,  Honorable  Council. 

In  accordance  with  the  provisions  of  chapter  one  hundred  and 
eleven  of  the  Resolves  of  the  year  eighteen  hundred  and  ninety-six, 
I  have  the  honor  to  transmit,  in  behalf  of  the  commission  to  inquire 
into  the  expediency  of  revising  and  amending  the  laws  of  the  Com- 
monwealth relating  to  taxation,  the  following  report. 

Very  respectfully, 

JAMES  R.  DUNBAR, 

Chairman. 


»f 


[In  the  Year  One  Thousand  Eight  Hundred  and  Ninety-six.] 


RESOLVE  TO  AUTHORIZE  THE  APPOINTMENT  OF  A  COMMISSION  TO  INQUIRE  INTO 
THE  EXPEDIENCY  OF  REVISING  AND  AMENDING  THE  LAWS  OF  THE  COM- 
MONWEALTH RELATING  TO  TAXATION. 

Resolved,  That  the  governor,  by  and  with  the  advice  and  consent  of  the  coun- 
cil, appoint  a  commission  of  five  persons  to  obtain,  collate  and  report  facts 
concerning  taxation,  present  a  summary  of  conclusions  to  be  drawn  therefrom, 
and  suggest  any  changes  advisable  in  the  laws  of  the  Commonwealth  relating  to 
taxation.  They  shall  have  authority  to  employ  assistance  and  to  send  for  persons 
and  papers,  and  their  necessary  expenses,  so  far  as  approved  by  the  governor 
and  council,  together  with  such  compensation  to  the  members  as  shall  be  deter- 
mined by  the  governor  and  council,  shall  be  paid  from  time  to  time  from  the 
treasury  of  the  Commonwealth.  They  shall  make  and  present  their  final  report 
to  the  governor  and  council  not  later  than  the  first  day  of  October  in  the  year 
eighteen  hundred  and  ninety-seven.  Two  thousand  copies  of  said  report  shall  be 
printed,  one  copy  of  which  shall  be  sent  by  the  secretary  of  the  Commonwealth 
to  each  of  the  members  elect  of  the  general  court  for  the  year  eighteen  hundred 
and  ninety-eight,  when  elected,  and  the  remainder  shall  be  distributed  in  such 
manner  as  the  commissioners  shall  determine.  [Approved  June  4, 1896.~\ 


UN]  ' 


INTRODUCTION. 


The  Commission  to  inquire  into  the  expediency  of  revis- 
ing and  amending  the  laws  of  the  Commonwealth  relating  to 
taxation  was  appointed  under  a  resolve  approved  June  4, 
1896,  which  declares  it  to  be  the  duty  of  the  Commission  to 
"  obtain,  collate  and  report  facts  concerning  taxation,  present 
a  summary  of  conclusions  to  be  drawn  therefrom,  and  suggest 
any  changes  advisable  in  the  laws  of  the  Commonwealth  re- 
lating to  taxation."  His  Excellency  the  Governor,  acting 
under  this  resolve,  appointed  on  the  Commission  five  persons 
from  various  walks  in  life,  —  representatives  respectively  of 
the  bench,  of  the  business  community,  of  the  farmers,  of  the 
workingmen,  and  of  the  professional  students  of  political 
economy.  Both  the  terms  of  the  resolve  and  the  principle 
of  appointment  followed  by  His  Excellency  the  Governor 
indicated  that  it  was  expected  of  the  Commission  not  so  much 
to  make  an  examination  of  the  details  of  existing  legisla- 
tion as  an  inquiry  into  its  broad  features  and  its  general 
equity  as  between  all  classes  and  all  parts  of  the  Common- 
wealth. A  Commission  charged  with  the  task  of  scrutinizing 
with  minute  care  the  laws  on  taxation,  of  attentively  con- 
sidering all  details,  of  removing  doubts  and  inconsistencies, 
of  systematizing  and  perfecting  the  machinery,  would  have 
been  composed  mainly  of  tax  officials  and  of  members  of  the 
bar.  Constituted  as  it  was,  the  Commission  conceived  its 
main  duty  to  be  the  consideration  of  the  general  methods  of 
taxation  and  the  salient  features  in  their  operation. 

The  Commission  has  held  in  all  forty-nine  meetings.  Of 
these,  twenty-five  were  meetings  at  which  witnesses  appeared, 
and  stenographic  reports  of  the  proceedings  at  these  meetings 


TAXATION  EEPORT. 

are  on  file  at  the  State  library.  The  number  of  meetings  in 
executive  session  was  twenty-four.  The  number  of  witnesses 
who  appeared  before  us  was  seventy-six,  among  whom  were 
assessors  from  eight  cities  and  thirteen  towns.* 

In  beginning  our  duties  we  have  found  that  it  is  no  easy 
task  for  one  not  versed  in  the  statutes  as  they  stand  to  ascer- 
tain what  is  the  existing  system  of  taxation.  It  is  true  that 
the  efficient  and  experienced  Tax  Commissioner  of  the  Com- 
monwealth prepares,  for  the  use  of  the  assessors  and  of 
others,  convenient  compilations  and  abstracts  of  the  statutes, 
which  make  it  possible  for  the  inquirer  to  discover  for  him- 
self what  are  now  the  important  features  of  the  laws.f  But 
these  documents  are  meant  for  the  use  mainly  of  the  tax 
officials,  and  are  not  designed  to  give  a  simple  and  summary 
statement  of  the  methods  of  taxation.  Moreover,  they  do 
not  touch  all  the  noteworthy  parts  of  the  present  system. 
While  some  parts  of  the  tax  laws  as  they  stand  now  are 
simple,  others  are  highly  complex,  and  need  careful  explana- 
tion to  make  clear  their  object  and  working.  We  believe 
that  it  may  be  of  service  to  the  citizens  of  the  Common- 
wealth if  we  begin  our  report  with  a  simple  exposition  of 
the  legislation  on  taxation  as  it  now  stands.  This  exposition 
will  be  followed  by  an  account  of  the  working  of  the  laws, 
of  their  merits  and  defects,  and  of  the  success  or  lack  of 
success  in  their  enforcement.  We  shall  conclude  finally  with 
our  recommendations  as  to  desirable  changes. 

Our  report  accordingly  will  divide  itself  into  three  parts  : 
I.  The  existing  tax  system.  II.  The  working  of  the  exist- 
ing tax  system.  III.  Proposals  and  recommendations. 

*  In  reviewing  the  testimony  at  these  hearings,  and  in  preparing  the  statistical 
matter  gathered  and  used,  the  Commission  has  been  greatly  aided  by  its  clerk,  Mr. 
H.  H.  Cook,  to  whom  acknowledgment  is  due  for  his  skilful  and  assiduous  services. 

t  The  most  important  of  these  compilations  are :  (1)  Chapter  11  of  the  Public 
Statutes,  and  a  compilation  of  the  subsequent  enactments  regulating  taxation  by  the 
local  assessors  in  Massachusetts;  (2)  Statutes  relating  to  taxes  and  excises  for 
revenue  upon  corporations  in  Massachusetts. 


PART      I  . 
THE   EXISTING   TAX   SYSTEM. 

The  description  of  the  legislation  as  it  now  stands,  to 
which  we  first  proceed,  is  not  meant  to  include  all  details  or 
to  aim  at  refined  statement  of  all  the  legal  aspects  of  the 
statutes,  —  it  is  meant  only  to  give  an  account  of  the  impor- 
tant features.  Some  parts  of  this  tax  legislation  are  familiar 
to  all ;  other  parts,  no  less  important,  affect  the  daily  life  of 
comparatively  few,  and  are  hardly  known  to  the  great  body 
of  the  citizens.  Some  parts  the  Commonwealth  has  main- 
tained on  the  statute  books  from  ancient  times,  and  shares 
with  all  the  States  of  the  Union ;  other  parts  are  of  recent 
adoption,  and  are  peculiar  to  this  State.  We  shall  describe 
the  important  provisions,  old  and  new,  familiar  and  unfamil- 
iar, omitting  details  as  much  as  possible,  and  confining  our- 
selves to  those  features  which  need  to  be  borne  in  mind  for 
the  later  discussion  of  the  working  of  the  laws  and  of  the 
changes  to  be  recommended. 

The  most  important  part  of  the  tax  system  is  the  general 
tax  on  property.  But,  partly  as  modifications  of  the  property 
tax,  partly  as  independent  taxes,  there  are  other  important 
sources  of  public  revenue.  There  is  the  poll  tax;  there  are 
taxes  on  corporations,  on  banks  and  savings  banks,  on  in- 
surance companies  ;  there  is  a  tax  on  collateral  inheritances  ; 
there  are  fees  from  liquor  licenses  ;  there  are  various  miscel- 
laneous taxes.  We  shall  describe  the  salient  features  of  the 
system  by  taking  up  first  the  poll  tax,  then  the  general  tax 
on  property,  and  finally  the  various  other  taxes. 

1.     TAXES  ON  POLLS  AND  PROPERTY. 
The  Poll  Tax. 

The  Commonwealth  of  Massachusetts  levies  a  poll  or  capi- 
tation tax  on  every  male  inhabitant  of  the  Commonwealth 
above  the  age  of  twenty  years,  whether  a  citizen  of  the 


TAXATION  REPORT. 

United  States  or  an  alien,  and  upon  every  female  citizen  of 
said  age  requesting  to  be  assessed  therefor.  The  poll  tax 
of  the  old,  poor  and  infirm  may  be  abated  at  the  discretion 
of  the  assessors. 

The  assessors  are  required  to  canvass  their  respective  cities 
and  towns,  and  after  diligent  inquiry  to  make  true  lists  of 
every  male  person  above  the  age  of  twenty  years  residing  in 
their  city  or  town,  and  of  all  women  of  the  like  age  who 
request  to  be  assessed.  In  cities  and  towns  of  more  than 
five  thousand  inhabitants  the  assessors  are  required  to  pre- 
pare and  to  have  printed  street  lists  arranged  by  voting 
precincts,  designating  all  buildings  used  for  residences,  and 
giving  the  age,  name  and  occupation  of  every  person  assessed 
for  a  poll  tax.  These  lists  are  sent  to  the  registrars  of  voters, 
though  it  is  not  necessary  for  registration  that  the  voter's 
name  be  entered  upon  this  list.  The  registrars,  on  their 
part,  are  required  to  make  a  return  to  the  assessors  of  the 
names  of  all  persons  who  have  registered  with  them  and 
whose  names  are  not  upon  the  assessors'  lists.  The  assessors, 
having  obtained  a  list  of  all  those  liable  for  a  poll  tax,  pro- 
ceed to  assess  upon  them  the  State  and  county  taxes.  The 
State  tax  is  assessed  upon  the  number  of  polls  in  each  place 
until  such  assessment  amounts  to  $1  upon  each  poll,  the 
remainder  of  the  tax  being  then  assessed  upon  property.  In 
like  manner  the  county  taxes  are  assessed  upon  the  polls  up 
to  the  sum  of  $1  on  each  poll,  the  remainder  there  also  being 
assessed  on  property.  The  effect  is  that  the  rate  of  the  poll 
tax  is  in  almost  all  cities  and  towns  $2  per  year.  In  six 
localities  only  is  there  a  less  rate.  In  the  city  of  Chelsea 
and  in  the  towns  of  Winthrop  and  Revere  the  poll  tax  is 
only  $1.  This  arises  from  the  fact  that  the  city  of  Boston 
assumes  the  entire  county  tax  for  the  county  of  Suffolk; 
hence  in  these  places  the  poll  tax  is  limited  to  the  State  tax 
of  $1.  In  three  towns  the  amount  of  the  total  poll  tax  levied 
in  the  manner  described  above  is  less  than  $2,  namely  :  Savoy, 
$1.80;  Gay  Head,  $1.50,  and  Prescott,  $1.97. 

In  former  years  payment  of  the  tax  was  a  condition  of  the 
exercise  of  the  franchise.  For  that  reason  it  was  for  the 


THE  POLL   TAX.  5 

most  part  paid,  —  if  not  directly  by  the  person  upon  whom 
it  was  assessed,  then  paid  on  his  behalf  by  the  political  or- 
ganization to  which  he  belonged.  By  an  amendment  of  the 
Constitution  in  1891  the  provision  making  the  payment  of 
the  tax  a  prerequisite  to  voting  was  repealed.  Since  that 
time  it  has  been  difficult  to  collect  the  tax  from  those  not 
subject  to  the  tax  for  property.  The  amount  in  each  case 
being  small,  the  tax  is  now  in  the  cities  very  largely  uncol- 
lectible, except  from  persons  who  are  also  taxed  for  property. 

Although  the  poll  tax  is  thus,  strictly  speaking,  a  State 
and  county  tax,  it  is  not  to  be  inferred  that  the  financial 
resources  of  the  State  or  of  the  counties  are  affected  by  the 
difficulty  of  collecting  it.  The  cities  and  towns  pay  over 
their  respective  shares  of  the  State  and  county  taxes,  with- 
out regard  to  the  success  of  their  collection  of  the  poll  tax. 
They  are  accountable  for  contributing  their  apportioned 
quotas  to  State  and  counties,  first  by  the  poll  tax  and  then 
by  taxes  on  property.  What  they  do  not  succeed  in  raising 
by  the  former  tax  they  must  make  up  by  the  latter. 

The  number  of  male  persons  assessed  for  poll  tax  in  1896 
was  723,736 ;  the  number  of  persons  assessed  for  poll  tax 
only  was  511,659  ;  the  amount  of  the  tax  assessed  on  polls 
was  $1,434,629. 

The  General  Property  Tax,  —  Exemptions. 

The  Commonwealth  of  Massachusetts  subjects  to  taxation  p.  s.,  c.  11,  §  2. 
"all  property,  real  and  personal,  of  the  inhabitants  of  the 
State  not  expressly  exempted  by  law." 

The  important  exemptions  are  of  two  kinds.  On  the  one  P.  s.,  c.  n,  §  s. 
hand,  Certain  property  is  exempted  which  is  used  not  for 
gain/but  for  purposes  which  it  has  been  thought  well  to 
cherisn  and  encourage?  (1)  Literary,  benevolent,  charitable 
and  scientific  institutions,  incorporated  by  the  State,  are  not 
taxed  on  their  personal  property  while  used  for  the  pur- 
poses of  their  incorporation,  nor  on  real  property  occupied 
by  them  or  by  their  officers  for  the  purposes  for  which  they 
are  incorporated.  Houses  of  religious  worship  are  exempt. 


6  TAXATION   KEPORT. 

The  property,  real  and  personal,  of  incorporated  Grand 
Army  and  veteran  associations  is  exempted  to  the  extent  of 
$20,000,  while  so  used;  the  property,  real  and  personal,  of 
incorporated  agricultural  societies  is  exempt ;  and  the  Bunker 
Hill  Monument  is  specifically  exempted.  (2)  Certain  ex- 
emptions are  made  with  a  design  to  prevent  the  burden  of 
taxation  from  being  unduly  heavy  on  those  not  able  to  bear 
it  easily.  Thus  property  is  exempt  to  the  amount  of  $500 
for  a  widow  or  unmarried  woman  above  the  age  of  twenty- 
one,  for  any  person  above  the  age  of  seventy-five,  or  for  any 
minor  whose  father  is  deceased,  provided  that  the  whole 
estate  of  such  persons  does  not  exceed  $1,000.  The  property 
of  soldiers  or  sailors  who  served  in  the  war  for  the  Union, 
or  of  their  wives,  is  exempt  up  to  $2,000  (provided  that 
their  estate  does  not  exceed  $5,000)  if  they  suffered  certain 
specified  disablements  in  the  service,  or  have  become  perma- 
nently incapacitated  for  the  performance  of  manual  labor. 
There  is  a  general  provision  by  which  the  assessors  may 
make  exemption  for  persons  who,  by  reason  of  age,  infirmity 
or  poverty,  are  unable  to  contribute.  Further,  wearing 
apparel  and  farming  utensils  are  entirely  exempt ;  the  tools 
of  a  mechanic  not  exceeding  $300  in  value  ;  household  fur- 
niture not  exceeding  $1,000  in  value. 

Certain  other  exemptions  are  also  made,  not  easily  classified 
under  either  of  the  above  heads.  Mules,  horses  and  neat 
cattle  less  than  one  year  old,  and  swine  and  sheep  less  than 
six  months  old,  are  exempt.  Plantations  of  some  kinds  of 
trees  are  also  exempt,  on  certain  conditions,  for  a  period  of 
years  ;  but  this  exemption,  designed  to  encourage  the  growth 
of  heavy  timber,  has  proved  of  little  practical  importance. 
With  these  exceptions,  and  some  others  of  insignificant  effect 
which  we  need  not  stop  to  enumerate,  all  property  is  taxable 
except  the  property  of  the  United  States,  that  of  the  State 
and  other  property  appropriated  to  public  uses. 

of0pedre8ocnrlit10        For  the  better  understanding  of  the  extent  and  definition 
see  pagl s?x      of  this  general  tax  liability,  it  will  be  advantageous  to  con- 
sider separately  the  taxes  on  real  property  and  on  personal 
property. 


REAL   PROPERTY.  7 

Taxes  on  Real  Property  and  Mortgages. 

Real  estate,  for  the  purposes  of  taxation,  includes  all  land  p- s-»  c.  n,  § 3. 
within  the  State  and  all  buildings  and  other  things  erected 
upon  or  affixed  to  it.     It  is  taxable  where  it  is  situated,  ir- 
respective of  the  domicile  of  its  owner. 

For  the  assessment  of  real  estate  the  law  makes  a  some- 
what different  provision  than  for  the  assessment  of  personal 
property.  The  assessors  are  called  upon  to  demand  of  the  P.S.,  c.n,§38. 
tax  payers  a  sworn  list  of  their  personal  estate.  But  no  such 
requirement  is  made  by  law  as  to  realty.  The  assessors, 
when  entering  on  the  process  of  assessment,  may  or  may  not 
require  the  inhabitants  to  bring  in  a  list  of  their  real  estate 
subject  to  taxation.  If  they  make  no  such  requirement,  the 
tax  payer  incurs  no  direct  penalty  for  failure  to  list  his  realty. 
The  assessors  estimate  its  value  and  assess  it  accordingly ; 
and  in  such  case,  although  having  made  no  return  of  his 
realty,  the  tax  payer,  if  dissatisfied  with  the  assessors' valua- 
tion, may  thereafter  file  a  list  and  make  his  own  valuation 
under  oath,  and  will  then  be  entitled  to  abatement  if  erro- 
neously assessed. 

An  important  part  of  the  method  of  taxing  real  estate  is  p.  s.,  c.  11, 
the  treatment  of  mortgaged  property.  It  is  often  stated  that 
mortgages  on  Massachusetts  real  estate  are  exempt  from  taxa- 
tion ;  but  this,  while  it  may  express  the  usual  outcome  of  the 
statutes,  does  not  state  their  exact  provisions.  Strictly,  the 
legislation  is  designed  to  bring  about  one  tax  on  the  real  estate, 
and  one  only,  whether  it  be  mortgaged  or  not.  It  applies, 
moreover,  only  to  mortgages  on  taxable  real  estate ;  hence  it 
does  not  apply  to  mortgages  on  realty  situated  outside  of  the 
Commonwealth,  or  on  real  estate  situated  within  it  but  ex- 
empt from  taxation  (as,  for  example,  mortgages  on  church 
property).  Mortgages  on  such  real  estate  not  taxable  by 
the  Commonwealth  are  taxable  as  personal  property  to  their 
holders.  As  to  taxable  realty,  either  the  mortgagor  or  the 
mortgagee  may  bring  to  the  assessors  of  the  town  where  the 
mortgaged  real  estate  lies,  a  statement  of  the  amount  of  the 
mortgage  and  the  name  and  residence  of  every  holder  of  an 


8  TAXATION   REPORT. 

interest  therein  as  mortgagee  or  mortgagor.  If  this  be  done, 
the  mortgage  is  taxed  to  the  holder,  usually  at  its  face  value, 
but  not  to  an  amount  exceeding  the  fair  cash  value  of  the 
mortgaged  premises.  The  mortgagor,  however,  is  usually 
under  no  inducement  to  make  a  return,  stating  the  mortgage 
on  his  property  and  the  extent  of  his  equity.  He  would 
have  such  an  inducement  only  if  taxes  on  the  mortgage 
thereby  became  chargeable  not  to  himself  but  to  the  mort- 
gagee. Mortgage  deeds,  however,  are  invariably  drawn  so 
as  to  stipulate  that  the  mortgagor  shall  assume  all  taxes. 
The  mortgagor  consequently  has  no  inducement  to  declare 
the  mortgage.  The  outcome  of  the  legislation  is  thus  that 
but  one  tax  is  levied  on  the  real  property,  and  that  the  mode 
of  payment  of  this  one  tax  is  left  to  be  adjusted  between 
the  mortgagor  and  the  mortgagee  in  such  manner  as  they 
may  agree.  In  practice,  the  mortgagor  or  borrower  agrees 
to  pay  the  one  tax,  and  contracts  his  loan  with  the  mort- 
gagee or  the  lender  on  this  basis.  Whether  the  arrange- 
ment has  proved  to  be  expedient  and  just  is  a  question  as  to 
the  working  of  the  tax  system,  which,  in  common  with  all 
other  such  questions,  we  shall  postpone  for  examination  in 
See  page  36.  ^he  second  part  of  our  report. 

The  total  valuation  of  real  estate  assessed  for  taxation  in 
1896  was  $2,040,200,644.  The  total  amount  of  taxes  as- 
sessed upon  real  estate  in  1896  was  $30,120,730. 

Taxes  on  Personal  Property. 

As  to  personal  property,  the  mode  of  assessment  is,  under 
the  letter  of  the  statutes,  different  from  that  as  to  real  prop- 
erty. The  assessors  are  directed  to  require  all  inhabitants  to 
bring  in  true  lists  of  all  their  polls  and  personal  estate. 
They  are  to  give  seasonable  notice  that  they  are  about  to 
make  an  assessment,  and  in  such  notice  are  required  to  de- 
mand lists  of  personal  property.  But  if  the  tax  payer  fails 
to  comply  with  the  requirement,  he  is  subjected  to  no  direct 
penalty.  The  assessors,  in  case  of  failure,  are  to  ascertain 
as  nearly  as  possible,  according  to  their  best  information 
and  belief,  the  particulars  of  the  personal  estate.  The 


TAXABLE   PERSONAL   PROPERTY.  9 

statute  calls  for  no  special  pressure  or  punitive  estimate  by 
the  assessors  as  to  the  tax  payers  who  have  made  no  return ; 
it  calls  only  for  an  estimate  at  just  value,  according  to  best 
information  and  belief.  From  the  tax  assessed  on  this  esti- 
mate, however,  the  tax  payer  may  be  allowed  an  abatement 
only  in  case  the  tax  exceeds  by  fifty  per  cent,  the  amount 
which  would  have  been  chargeable  if  a  return  under  oath 

O 

had  been  seasonably  made,  and  only  the  excess  over  this  fifty 
per  cent,  may  then  be  abated.  The  penalty  for  failure  to 
make  a  return  thus  is  only  the  indirect  one  of  a  limitation  of 
the  amount  of  abatement  if  the  tax  by  estimate  proves  to  be 
heavier  than  the  tax  would  have  been  in  case  of  a  return. 

It  should  be  observed,  further,  that  the  assessments  made 
by  the  assessors,  whether  on  the  basis  of  return  or  of  esti- 
mate, are  to  be  kept  open  to  public  inspection.  Strictly 
speaking,  they  may  be  examined  only  by  property  holders 
(whether  resident  or  non-resident),  these  having  free  access 
to  them  at  all  times.  Practically,  whatever  assessments  are 
made  by  the  assessors,  whether  by  estimate  or  by  return,  are 
thus  published  to  all  the  world. 

The  law  defines  with  much  detail  what  is  personal  prop-  P.  s.,  c.  11,  §  *. 
erty  for  the  purposes  of  taxation.  Without  following  the 
precise  order  of  the  enumeration  made  in  the  statutes,  we 
may  classify  the  taxable  personal  estate  under  the  following 
heads  :  (1)  "Goods,  chattels,  money,  and  effects,  wherever 
they  are,  ships  and  vessels  at  home  or  abroad"  ;  with  the 
exception,  however,  that  vessels  engaged  in  the  foreign 
carrying  trade  are  taxable  only  for  the  net  yearly  income 
paid  out  to  the  owner  in  the  way  of  dividends.  (2)  **  Money 
at  interest,  and  other  debts  due  the  persons  to  be  taxed  more 
than  they  are  indebted  or  pay  interest  for."  Debts  secured 
by  mortgage  on  taxable  real  estate  are  expressly  declared  to 
be  not  included  ill  such  taxable  debts.  On  the  other  hand, 
indebtedness  on  mortgage  may  not  be  used  by  the  debtor  to 
reduce  the  amount  for  which  he  may  be  taxable  on  account 
of  debts  due  to  him.  Barring  this  exception  as  to  mortgage 
debts,  debts  due  to  the  tax  payer  are  taxable,  but  may  be 
offset  to  the  extent  of  indebtedness  owed  by  him.  In  no 


10  TAXATION  REPORT. 

other  way  is  allowance  made  in  the  statutes  for  a  tax  payer's 
indebtedness.  (3)  "  Public  stocks  and  securities,  bonds  of 
all  railroads  including  street  railways,  stocks  in  turnpikes, 
bridges,  and  moneyed  corporations,  within  and  without  the 
State."  But  shares  in  corporations  chartered  by  the  State 
or  organized  under  its  general  laws  are  not  taxable  to  the 
holder  for  State,  county,  city  or  town  purposes.  They  are 
taxable  for  school  district  or  parish  purposes,  but  this  liabil- 
ity is  practically  of  no  moment.  The  taxation  of  the  prop- 
erty of  Massachusetts  corporations  is  secured  by  the  general 
franchise  tax  levied  on  them,  which  will  be  described  under 
See  page  14.  another  head.  There  are  some  other  minor  exceptions  to  the 
general  rule  as  to  the  taxation  of  securities  to  their  holder,  but 
these  we  will  not  stop  to  consider,  as  they  do  not  materially 
affect  the  general  tax  system.  (4)  "  Income  from  an  annuity, 
from  ships  and  vessels  engaged  in  the  foreign  carrying  trade, 
and  so  much  of  the  income  from  a  profession,  trade,  or  employ- 
ment as  exceeds  the  sum  of  two  thousand  dollars  a  year ;  but 
no  income  shall  be  taxed  which  is  derived  from  property  sub- 
ject to  taxation."  Under  this  provision,  incomes  from  a  profes- 
sion and  from  salaries  are  clearly  taxable.  A  question  has 
arisen,  however,  whether  a  tax  is  chargeable  on  the  income  de- 
rived by  a  business  man  from  the  use  of  property  already 
subject  to  taxation.  At  one  time  it  was  a  practice  among 
assessors,  in  administering  the  tax  on  income  from  trade  and 
business,  to  make  allowance  for  the  taxes  already  assessed  on 
the  property  whose  use  in  business  gave  rise  to  the  income. 
It  was  assumed  that  the  gross  income  from  a  business  was  to 
be  regarded  partly  as  interest  on  the  capital  engaged  and 
already  taxed,  and  partly  as  the  result  of  skill  and  labor  in 
management ;  therefore  in  part  only  as  income  from  the  trade, 
and  not  from  the  taxed  property.  The  part  of  the  income 
derived  solely  from  the  trade  was  regarded  as*  taxable  income. 
By  allowing  six  per  cent,  interest  on  the  taxed  business 
property,  and  by  assessing  the  income  tax  only  on  the  excess 
of  what  was  earned  from  the  business  over  and  above  this  in- 
terest allowance,  it  was  thought  that  the  ^income  from  the 
trade  was  taxed  in  conformity  with  the  statute ;  while  by 


TAXABLE  PERSONAL   PROPERTY.  11 

allowing  for  interest  on  the  business  property  already  taxed, 
there  was  no  tax  on  the  income  derived  from  property  subject 
to  taxation.  But  a  decision  of  the  Supreme  Court  interpreted  103  Mass.  5M. 
the  statute  to  mean  that  all  incomes  from  trade  must  be  re- 
garded as  derived  from  skill  and  labor  in  management  as 
well  as  from  the  use  of  capital,  and  that  assessors  must  tax 
the  whole  income  from  a  business,  even  though  property 
engaged  in  it  was  already  taxed. 

Personal  property  is  assessed  in  general  to  the  owner  at 
the  place  of  his  domicile.  The  statutes  provide  that,  subject 
to  certain  important  exceptions,  to  be  presently  considered, 
"all  personal  estate,  within  or  without  the  Commonwealth,  P. s., 0.11,520. 
shall  be  assessed  to  the  owner  in  the  city  or  town  where  he 
is  an  inhabitant  on  the  first  day  of  May."  "  An  inhabitant," 
for  the  purposes  of  taxation,  is  a  person  having  a  domicile. 
A  person  is  ordinarily  an  inhabitant,  or  is  domiciled,  where 
he -has  a  residence.  The  fact  of  actual  habitual  dwelling  in 
any  one  place  during  a  great  part  of  the  year,  including  the 
date  named  in  the  statute,  must  be  very  strong  evidence  of 
domicile  for  the  purposes  of  taxation. 

The  presumption  that  bodily  presence  at  a  particular  date 
goes  far  to  fix  domicile  is  strengthened  by  another  provision 
in  the  statutes  relating  to  taxation.  "  A  taxable  person  who  p.s.,c.n,§i2. 
is  in  a  city  or  town  on  the  first  day  of  May,  and  who,  when 
inquired  of  by  the  assessors  thereof,  refuses  to  state  where  he 
considers  his  legal  residence  to  be,  shall  for  the  purposes  of 
taxation  be  deemed  an  inhabitant  of  that  place.  If,  when  so 
inquired  of,  he  designates  another  place  as  his  legal  residence, 
said  assessors  shall  notify  the  assessors  of  such  place,  who, 
on  receiving  the  notice,  shall  tax  such  person  as  an  inhabitant 
of  their  city  or  town.  But  such  person  shall  not  be  exempt 
from  the  payment  of  a  tax  legally  assessed  to  him  in  the  city 
or  town  of  his  legal  domicile."  The  statutes  also  provide 
for  the  punishment  by  fine  of  not  less  than  $500  and  not 
more  than  $5,000  of  any  "inhabitant  "  of  the  Commonwealth 
who  escapes  taxation  by  "  wilfully  and  designedly  changing 
or  concealing  his  residence." 

There  are  important  exceptions,  however,  to  the  general  P.S.,C.II,§». 


12  TAXATION   REPORT. 

rule  that  personal  property  is  taxable  to  the  owner  at  his 
place  of  domicile.  Certain  specified  kinds  of  personal  prop- 
erty are  taxed  where  they  are  situated,  or  where  the  business 
for  which  they  are  used  is  conducted:  (1)  "All  goods, 
wares,  merchandise,  and  other  stock  in  trade,  (except  ships 
and  vessels  owned  by  a  copartnership,)  including  stock  em- 
ployed in  the  business  of  manufacturing  or  of  the  mechanic 
arts  in  cities  or  towns  within  the  Commonwealth,  whether 
such  owners  reside  within  or  without  the  Commonwealth, 
shall  be  taxed  in  those  places  where  the  owners  hire  or  oc- 
cupy manufactories,  stores,  shops,  or  wharves,  whether  such 
property  is  within  said  places  or  elsewhere  on  the  first  day 
of  May  of  the  year  when  the  tax  is  made."  That  is,  stock 
in  trade  is  taxed  where  the  business  is  carried  on.  This 
may  or  may  not  be  the  place  where  the  owner  lives,  and  may 
or  may  not  be  the  place  where  the  goods  are  situated.  The 
owners  may  reside  in  another  city  or  town  of  the  Common- 
wealth, or  may  reside  in  another  State ;  the  stock  in  trade 
maybe  situated  in  another  city  or  town  from  that  in  which  the 
premises  of  the  business  are ;  it  is  taxable  where  the  owners 
"hire  or  occupy  manufactories,  stores,  shops,  or  wharves." 
It  is  important  to  note,  however,  that  these  provisions  do  not 
apply  to  stock  in  trade  owned  by  Massachusetts  corpora- 
tions; nor  do  they  apply  to  stock  in  trade  not  "in  cities 
or  towns  within  the  Commonwealth."  Stock  in  trade  out- 
side the  Commonwealth,  owned  by  inhabitants  thereof,  is 
taxable  to  the  owner  at  his  domicile.  (2)  "All  machinery 
employed  in  any  branch  of  manufactures  shall  be  assessed 
where  such  machinery  is  situated  or  employed."  This  holds 
good  of  the  machinery  owned  by  corporations,  as  well  as  of 
that  owned  by  individuals  and  firms.  Machinery  is  thus 
treated  precisely  like  real  estate ;  it  is  taxed  where  it  is, 
whether  the  owner  lives  within  the  same  town  or  within 
the  State.  (3)  "Horses,  mules,  neat  cattle,  sheep,  and 
swine,  kept  throughout  the  year  in  places  other  than  those 
where  the  owners  reside,  whether  such  owners  reside  within 
or  without  the  Commonwealth,  and  horses  employed  in  stages 
or  other  vehicles  for  the  transportation  of  passengers  for  hire, 


TAXABLE   PERSONAL   PROPERTY.  13 

shall  be  assessed  to  the  owners  in  the  places  where  they  are 
kept."  (4)  "All  personal  property  within  the  Common- 
wealth leased  for  profit  shall  be  assessed  for  taxation  in  the 
city  or  town  where  such  property  is  situated  on  the  first  day 
of  May  to  the  owner  or  person  having  possession  of  the 
same." 

As  to  these  sorts  of  tangible  and  visible  personal  prop- 
erty the  statutes  thus  depart  from  the  rule  that  personalty 
is  taxable  to  the  owner  at  his  place  of  domicile.  They  are 
taxable,  either  where  the  business  is  carried  on,  or  where 
they  are  situated,  or  where  they  are  kept,  whether  the  own- 
ers reside  within  or  without  the  Commonwealth.  But  prop- 
erty of  this  sort  not  within  this  State  is  treated  according  to 
the  general  rule  ;  if  it  belongs  to  an  inhabitant  of  the  Com- 
monwealth, it  is  taxed  to  him  at  his  domicile.  The  same 
general  policy  is  followed  in  regard  to  another  form  of 
personal  property,  —  ships  and  vessels.  "  Ships  or  vessels  p. s., 0.11,  §25. 
owned  by  a  partnership  shall  be  assessed  to  the  several 
partners  in  their  places  of  residence,  proportionally  to  their 
interests  therein,  if  they  reside  within  the  Commonwealth; 
but  the  interests  of  the  several  partners  who  reside  without 
the  Commonwealth  shall  be  assessed  to  the  partnership  in 
the  place  where  its  business  is  carried  on." 

There  are  also  special  provisions  relative  to  property  in 
the  hands  of  guardians,  trustees  and  the  estates  of  deceased 
persons. 

The  total  valuation  of  personal  property  assessed  for 
taxation  by  the  local  assessors  in  1896  was  $582,319,634. 
The  amount  of  taxes  assessed  upon  personal  property  was 
$8,398,980. 

2.     CORPORATION  TAXES. 

We  have  now  completed  the  description  of  the  main 
features  of  that  part  of  the  tax  system  whose  administration 
is  entrusted  chiefly  to  the  assessors  and  other  officers  of  the 
several  cities  and  towns.  We  turn  now  to  certain  taxes 
which  are  administered  wholly  or  in  part  by  officers  of  the 
State,  among  which  the  most  important  are  the  various 


14  TAXATION  REPORT. 

taxes  oil  corporations,  including  Massachusetts  corporations, 
savings  banks,  and  insurance  companies. 

The  General  Corporation  Tax. 

§§  38-46'. :3>  First  and  most  important  is  the  general  franchise  tax  on 

corporations  chartered  or  organized  under  the  laws  of  the 
Commonwealth.  This  tax  is  designed  to  bring  about  the 
taxation  of  such  corporations  fully  and  fairly,  in  such  manner 
as  to  reach  all  their  property,  and  to  reach  it  once  and  once 
only.  It  is  unique  in  the  tax  experience  of  the  States  of  the 
Union.  No  other  State  has  adopted  this  precise  mode  of 
taxing  the  corporations  whose  corporate  privileges  depend 
on  its  laws. 

In  its  main  outlines  the  plan  of  the  tax  is  as  follows : 
The  real  estate  and  machinery  of  all  corporations  situated 
within  the  Commonwealth  are  assessed  by  the  local  author- 
ities, and  the  taxes  on  them  are  paid  directly  to  the  re- 
spectjve  cities  or  towns.  The  remainder  of  the  property 
of  the  corporation,  as  indicated  by  the  market  value  of  the 
outstanding  shares,  over  and  above  the  taxed  value  of  the  real 
estate  and  machinery,  is  taxed  by  the  Commonwealth  under 
the  corporation  or  franchise  tax,  and  payment  is  made  in  the 
first  instance  to  the  treasury  of  the  Commonwealth.  The 
proceeds,  however,  do  not  accrue  in  toto  to  the  treasury  of 
the  Commonwealth,  but  are  divided  in  large  part  among  the 
cities  and  towns  of  the  State . 

All  corporations  chartered  by  the  Commonwealth  of  Massa- 
chusetts, or  organized  under  the  general  corporation  laws, 
for  the  purpose  of  business  or  profit,  having  a  capital  stock 
divided  into  shares,  are  subject  to  this  annual  tax,  entitled  a 
tax  upon  their  corporate  franchise.  The  tax  affects,  there- 
fore, corporations  of  the  most  various  kinds, — manufactur- 
ing and  trading  establishments,  street  railways,  gas  and 
electric  lighting  companies,  electric  power  companies,  private 
water  supply  companies,  telegraph  and  telephone  companies 
and  certain  insurance  companies.  There  are  some  important 
exceptions,  however,  to  the  scope  of  the  tax.  Savings  banks 
are  taxed  differently  ;  banko  and  mutual  insurance  companies 


THE   GENERAL  CORPORATION  TAX.  15 

are  also  treated  in  a  different  way.  For  the  banks  a  different 
method  was  devised,  mainly  because  of  the  safeguards  which 
the  Federal  government  has  thrown  about  the  national  banks. 
Certain  mutual  insurance  companies,  on  the  other  hand,  are 
taxed  on  a  different  basis.  Besides  these  important  excep- 
tions there  are  some  others  of  less  consequence ;  as,  for 
instance,  in  the  case  of  coal  and  mining  companies  and 
companies  formed  to  build  and  operate  railroads  in  foreign 
countries. 

The  general  corporation  tax  is  assessed  by  the  Tax  Com- 
missioner with  the  aid  of  returns  from  the  corporations  and 
from  the  local  assessors.  Every  corporation  must  return  to 
the  Tax  Commissioner,  under  oath  of  its  treasurer,  a  com- 
plete list  of  its  shareholders,  their  places  of  residence,  the 
number  of  shares  owned  by  each  on  the  first  day  of  May, 
the  amount  of  the  capital  stock  of  the  corporation,  its  place 
of  business,  the  par  value  and  the  market  value  of  the  shares 
on  the  first  day  of  May  and  a  statement  of  the  works, 
structures,  real  estate  and  machinery  owned  by  the  corpo- 
ration and  subject  to  local  taxation  within  the  Common- 
wealth ;  in  the  case  of  railroad  and  telegraph  companies,  the 
whole  length  of  their  lines  and  the  length  of  so  much  of 
their  lines  as  is  without  the  Commonwealth ;  in  the  case  of 
other  corporations,  the  amount,  value,  and  location  of  all 
works,  structures,  real  estate,  and  machinery  owned  by  them 
and  subject  to  taxation  without  the  Commonwealth. 

The  assessors  of  each  city  and  town  also  return  to  the  Tax 
Commissioner  by  the  first  Monday  in  August  the  names  of 
all  corporations  established  in  their  respective  cities  or  towns 
or  owning  real  estate  therein,  and  a  statement  of  the  works, 
structures,  real  estate,  and  machinery  owned  by  each  corpora- 
tion, and  the  amount  for  which  such  property  is  valued  for 
local  taxation.  From  these  returns,  or  otherwise  at  his  dis- 
cretion, the  Tax  Commissioner  ascertains  the  true  value  of 
the  shares  of  each  corporation,  which  is  described  in  the 
statute  as  the  "  true  value  of  its  corporate  franchise."  The 
shares  of  many  corporations  being  sold  from  time  to  time  on 
the  open  market,  their  market  value  is  comparatively  easy 


16  TAXATION   REPORT. 

to  ascertain ;  but  with  the  greater  number  of  corporations 
affected  by  the  tax,  the  shares  are  seldom,  if  ever,  sold  or 
offered  for  sale  in  open  market.  In  the  case  of  such  corpora- 
tions the  Tax  Commissioner  procures  from  the  corporation  a 
statement  of  the  condition  of  the  company,  of  its  assets  and 
liabilities.  In  case  of  refusal  to  render  a  statement  of  con- 
dition, the  commissioner  is  authorized  to  examine  the  books 
and  to  examine  on  oath  the  treasurer  and  directors.  From 
this  information,  and  such  other  information  as  he  may  be 
able  to  procure,  the  commissioner  proceeds  to  put  upon  the 
corporation  what  he  considers  to  be  a  just  estimate  of  the 
true  value  of  its  "  corporate  franchise." 

From  the  aggregate  value  of  the  shares  of  the  company 
thus  determined  the  Tax  Commissioner  makes  the  following 
deductions.  First,  in  the  case  of  railroad  and  telegraph 
companies  whose  lines  extend  beyond  the  limits  of  the  State, 
such  portion  of  the  whole  valuation  as  is  proportional  to  the 
length  of  that  part  of  their  line  lying  without  the  Common- 
wealth is  deducted;  and,  further,  an  amount  equal  to  the 
value  of  their  real  estate  and  machinery  located  and  subject 
to  taxation  within  the  Commonwealth.  Second,  in  the  case 
of  a  telephone  company,  so  much  of  the  whole  valuation  as. 
is  proportional  to  the  number  of  telephones  used  or  controlled 
by  it  without  the  Commonwealth,  and  also  the  value  of  all 
stock  in  other  corporations  held  by  it  upon  which  it  has 
paid  a  tax  for  the  year  preceding.  Third,  in  case  of  an  in- 
surance company,  the  value  of  mortgages  on  real  estate  held 
by  it  subject  to  local  taxation.  Fourth,  in  the  case  of  all 
other  corporations,  an  amount  equal  to  the  value  of  the  real 
estate  and  machinery  subject  to  local  taxation  within  or 
without  the  State.  The  total  value  of  the  shares,  thus  dimin- 
ished by  allowance  for  real  estate  and  machinery  already 
taxed,  and  by  the  mileage  and  other  apportionment  in  the 
case  of  railroad  and  telegraph,  and  telephone  companies, 
may  be  called  the  taxable  corporate  excess. 

This  corporate  excess  is  then  taxed  at  a  rate  which  is 
roughly  the  average  rate  of  taxation  in  the  Commonwealth. 
It  is  determined  by  an  apportionment  of  the  whole  amount 


THE   GENERAL   CORPORATION   TAX.  17 

of  money  to  be  raised  by  taxation  upon  property  in  the 
Commonwealth  during  the  current  year  upon  the  aggregate 
valuation  of  all  the  cities  and  towns  for  the  preceding  year. 

The  amount  of  the  tax  thus  computed  on  corporate  excess 
is  then  collected  by  the  Treasurer  of  the  Commonwealth. 
The  Tax  Commissioner  notifies  the  treasurer  of  each  corpo- 
ration of  the  amount  of  its  tax ;  and  the  ease  and  certainty 
with  which  penalties  can  be  applied  to  domestic  corporations 
cause  the  taxes  to  be  paid,  as  a  rule,  promptly,  and  with  a 
minimum  of  expense  for  collection. 

The  tax  having  been  paid  into  the  treasury  of  the  Com- 
monwealth, it  is  in  part  distributed  among  the  cities  and 
towns,  in  part  retained  by  the  State.  On  the  principle  that 
personal  property  is  taxable  at  the  place  of  the  owner's  domi- 
cile, such  proportion  of  the  tax  as  corresponds  to  the  pro- 
portion of  stock  owned  by  persons  residing  in  the  Common- 
wealth is  credited  and  paid  to  the  several  cities  and  towns, 
where  (as  may  appear  from  the  corporation's  list  of  stock- 
holders or  from  such  other  evidence  as  the  Tax  Commissioner 
may  procure)  such  shareholders  resided  on  the  first  day  of 
May  next  preceding.  The  remainder  of  the  tax,  which  rep- 
resents the  shares  in  Massachusetts  corporations  owned  by 
persons  who  are  not  residents  of  any  city  or  town  in  the 
Commonwealth,  is  retained  in  the  State  treasury. 

Yield  of  the  Tax  in  1896. 

Net  amount  assessed  by  the  Tax  Commissioner,  .  .  $3,829,528  02 
Amount  certified  as  due  to  cities  and  towns,  .  .  .  2,729,665  85 

Balance  accruing  to  the  Commonwealth,  .         .         .     $1,099,86217 

Taxes  on  Banks. 

Banks  are  taxed  by  a  method  similar  in  its  main  features  P.  s.,  c.  is, 
to  that  of  the  general  corporation  tax,  but  with  some  differ-    ' 
ences  of  detail,  due  mainly  to  the  need  of  conforming  to  the 
provisions  of  the  Federal  laws  with  regard  to  national  banks. 
Strictly   speaking,    the   bank   tax   applies   to   all    "  banks, 
whether  of  issue  or  not,"  irrespective  of  their  being  national 


18  TAXATION  REPORT. 

or  State  banks.  But,  as  the  banks  (other  than  the  trust 
companies,  which  will  be  considered  later)  are  without  excep- 
tion national  banks,  the  tax  method  here  described  applies 
only  to  them.  In  general,  it  may  be  said  that,  as  in  the 
case  of  domestic  corporations,  banks  pay  the  taxes  on  their 
property  directly,  their  shareholders  being  in  no  way  con- 
cerned with  the  assessment  or  payment ;  and,  as  in  the  case 
of  domestic  corporations,  the  proceeds  of  the  tax  are  divided 
among  the  cities  and  towns  according  to  the  ownership  of 
shares  by  their  inhabitants. 

The  shares  in  banks  are  taxed  to  their  owners  by  the  local 
authorities.  The  banks,  however,  are  called  on  to  pay,  on 
behalf  of  the  shareholders,  the  taxes  so  assessed  upon  the 
shares.  They  are  assessed  for  the  fair  cash  value  of  the 
shares,  less  the  value  of  the  real  estate  owned.  On  this 
valuation  the  banks  pay  the  tax  on  the  shares  at  the  local 
rate  < '  for  all  State,  county,  and  town  taxes."  The  process  thus 
differs  in  important  respects  from  that  applied  to  Massachu- 
setts corporations.  The  tax  so  assessed  on  the  bank  at  the 
local  rate  is  paid  to  the  collector  of  the  city  or  town ;  this 
done,  the  banks  and  their  shareholders  have  no  further 
duties. 

The  cashier  of  every  such  bank  is  required  to  furnish  to 
the  local  assessors  the  names  and  addresses  of  the  share- 
holders and  of  the  number  of  shares  severally  owned  by 
them.  A  copy  of  this  list  is  transmitted  to  the  Tax  Com- 
missioner, and  enables  that  officer  to  ascertain  where  the 
shares  are  held.  The  assessors  also  inform  the  commissioner 
of  the  rate  per  cent,  upon  the  valuation  of  the  city  or  town 
of  the  total  tax  in  such  city  or  town.  The  city  or  town 
in  which  the  bank  is  located,  and  which  has  received  the 
tax  from  it,  is  entitled  to  retain  for  its  own  use  so  much  of 
the  tax  as  is  represented  by  local  real  estate  owned  by 
the  bank,  and  by  shares  which  its  inhabitants  own  ;  and 
may  further  retain  a  commission  of  one  per  cent,  on  the 
total  amount,  as  compensation  for  the  trouble  of  assessing 
and  collecting  the  tax.  Other  towns  or  cities  in  which  tax- 
able shareholders  reside  become  entitled  to  such  proportion 


THE    BANK   TAX.  19 

of  the  tax  as  the  ownership  of  shares  by  their  taxable  inhabi- 
tants represents.  The  proceeds  of  the  tax  are  thus  distrib- 
uted, as  in  the  case  of  Massachusetts  corporations,  according 
to  the  domicile  of  the  shareholders.  Strictly  speaking,  the 
sums  which  thus  become  due  from  and  to  the  several  local 
bodies  are  not  paid  in  cash,  but  become  credits  and  debits, 
as  the  case  may  be,  in  the  general  balance  of  accounts  be- 
tween them  and  the  treasury  of  the  Commonwealth.  This 
method  of  balancing  accounts,  however,  simply  serves  as  a 
convenient  means  of  securing  the  effective  distribution  of  the 
bank  taxes.  It  should  be  noticed  that,  as  in  the  case  of 
Massachusetts  corporations,  such  part  of  the  tax  as  is  repre- 
sented by  shares  owned  outside  the  State  accrues  definitively 
to  the  treasury  of  the  Commonwealth.  The  city  or  town 
where  the  bank  is  located  is  accountable  to  the  treasury  as 
to  all  shares  owned  outside  its  own  limits,  while  the  treasury 
is  accountable  to  other  cities  and  towns  only  for  such  of 
these  outside  shares  as  are  owned  by  inhabitants  of  other 
places  in  the  Commonwealth. 

One  further  peculiarity  of  the  bank  taxes  should  be 
noticed.  The  provisions  for  their  distribution  contemplate  a 
refunding  of  the  taxes  to  shareholders  who  are  exempt  from 
taxation  or  taxed  at  any  rate  lower  than  the  ordinary  rate. 
If  an  educational  or  charitable  institution,  a  Grand  Army 
association  or  agricultural  society,  is  exempt  from  taxation 
on  its  personal  property,  it  is  entitled  to  receive  from  the 
treasury  of  the  Commonwealth  the  amount  which  the  bank 
has  paid  in  respect  of  the  shares  owned  by  the  institution 
or  society.  Further,  if  a  savings  bank  (being  taxable  on 
its  deposits  at  the  moderate  rate  of  one-half  of  one  per  cent., 
as  will  be  presently  described)  owns  shares  in  a  bank,  it  is  seepage 20. 
entitled  to  a  partial  return  of  the  taxes  paid  by  the  bank  on 
account  of  such  shares.  The  treasury  pays  back  to  the 
savings  bank  one-half  of  one  per  cent.,  that  being  the  tax 
which  the  savings  bank  has  paid  on  its  deposits ;  the  rest 
the  treasury  keeps.  Similarly,  where  bank  shares  are  owned 
by  widows  or  spinsters,  by  aged  persons  or  by  the  infirm 
and  poor,  who  may  be  exempted  from  taxation,  such  owners 


20  TAXATION  REPORT. 

are  entitled  to  repayment  from  the  city  or  town  of  the 
taxes  paid  by  the  bank  in  respect  of  shares  owned  by  them. 
Similarly,  where  mutual  insurance  companies,  which  are 
taxed  by  a  different  process,  own  shares  in  banks,  they  are 
repaid  the  amount  of  the  taxes  received  by  the  State  treasury 
on  account  of  such  shares.  No  such  provisions  are  made 
where  exempted  institutions  or  persons,  or  corporations 
taxed  by  some  special  machinery,  own  shares  in  Massa- 
chusetts corporations  taxable  under  the  general  corporation 
tax. 

Yield  of  the  Bank  Tax  in  1896. 

Whole  amount  of  tax  on  bank  shares  assessed,  .  .  $1,543,535  11 
Of  which  there  was  retained  by  towns  on 

account  of  shares  owned  by  residents,     .     $547,238  37 
And  there  was  due  and  paid  into  the  treas- 
ury  996,296  74 

$1,543,535  11 

There  was  paid  into  and  due  to  the  treasury  on  account 

of  tax  of  1896, $996,29674 

There  was  certified  due  to  cities  and  towns 
on  account  of  tax  of  1896  on  bank  shares, 
owned  by  residents,          ....     $368,526  56 
There  will  be  due  to  savings  institutions,  .       144,380  99 
Insurance  companies,  .....         28,313  63 
Literary,  scientific  and  charitable  societies,         34,023  92 
Accruing  to  the  Commonwealth,        .        .       421,051  64 

$996,296  74 


Taxes  on   Savings  Banks. 

§§'20-23 13'  Savings  banks  and  institutions  for  savings  form  a  class  by 

themselves.  Under  the  established  legislation  of  the  Com- 
monwealth, they  are  treated  not  as  money-making  institu- 
tions, but  as  public  trusts  administered  under  the  supervision 
of  the  Savings  Bank  Commissioners  for  the  benefit  of  the 
depositors.  They  are  not  taxable  under  the  general  corpo- 
ration tax  law.  They  pay  a  special  moderate  tax  to  the 
Commonwealth,  at  the  rate  of  one-half  of  one  per  cent, 
yearly,  on  the  amount  of  their  deposits,  subject  to  certain 
deductions. 

Every  savings  bank  and  institution  for  savings  incorpo- 


THE   SAVINGS   BANK  TAX.  21 

rated  under  the  laws  of  this  Commonwealth  must  semi- 
annually,  on  or  before  the  second  Mondays  of  May  and 
November,  make  to  the  Treasurer  of  the  Commonwealth  a 
sworn  return,  stating  the  amount  of  its  deposits  on  the  first 
days  of  May  and  November,  and  of  the  average  amount 
of  its  deposits  for  the  six  months  next  preceding  each  of 
those  days.  From  these  returns  the  Tax  Commissioner 
assesses  the  tax  upon  the  various  banks  in  proportion  to 
the  average  amount  of  their  deposits  during  each  semiannual 
period,  at  the  rate  fixed  by  law ;  namely,  one-fourth  of  one 
per  cent,  for  each  semiannual  period,  or  one-half  of  one  per 
cent,  per  annum.  The  banks,  however,  are  allowed  certain 
deductions.  They  are  exempt  from  taxation  on  so  much  of 
their  deposits  as  are  invested  (1)  in  real  estate  used  for 
banking  purposes,  (2)  in  loans  secured  by  mortgage  on 
taxable  real  estate,  (3)  in  real  estate  acquired  by  reason 
of  foreclosure  for  a  certain  limited  period,  (4)  in  shares  of 
banks  taxed  by  the  Commonwealth,  the  exemption  in  this 
case  being  partial,  as  described  in  the  preceding  paragraphs,  seepage^. 

The  proceeds  of  the  savings  bank  tax  accrue  entirely  to 
the  treasury  of  the  Commonwealth,  no  distribution  being 
made  of  the  proceeds. 

Yield  of  the  Savings  Bank  Tax  in  1896. 

May  assessments, $641,858  96 

November  assessments, 649,397  51 


Total, $1,291,256  47 

Taxes  on  Trust  Companies. 

Safe  deposit,  loan  and  trust  companies  form  a  separate 
class,  so  far  as  taxation  is  concerned.  Such  companies,  ex- 
cept where  their  charters  contain  special  provisions,  are  taxed 
according  to  a  system  which  approximates  much  more  closely 
to  the  general  corporation  tax  than  do  the  other  bank  taxes. 
They  are  taxed  on  their  capital  stock  under  the  general  cor- 
poration tax  law,  like  other  domestic  corporations.  They 
are  also  subject  to  a  separate  tax  on  their  trust  funds  and 
deposits. 


22  TAXATION  REPORT. 

The  tax  on  trust  funds  and  deposits  is  levied  in  two  dis- 
tinct parts ;  the  first  upon  personal  property  held  in  trust, 
and  the  second  upon  deposits.  (1)  The  corporation  makes 
an  annual  sworn  return  to  the  Tax  Commissioner  of  all  per- 
sonal property  held  in  trust  on  the  first  day  of  May  which 
would  be  taxable  if  held  by  an  individual  trustee,  of  the 
name  of  the  city  or  town  of  the  Commonwealth  in  which 
any  beneficiary  resides,  the  aggregate  amount  held  for  per- 
sons resident  in  each  such  city  and  town  and  the  aggregate 
amount  held  for  persons  residing  outside  of  the  State. 
Guided  by  this  return,  the  Tax  Commissioner  makes  a  valua- 
tion of  the  property  and  assesses  a  tax  upon  the  total  value 
of  the  property  at  the  rate  determined  under  the  general 
corporation  tax  law.  Thus,  property  of  this  sort  is  taxed 
as  if  held  by  individual  trustees,  except  that  it  is  taxed  at 
the  average  rate  of  taxation  in  the  State,  instead  of  at  the 
local  rate  where  the  trustee  resides.  (2)  Such  corporations 
also  make  an  annual  sworn  return  of  the  amount  of  all  sums 
deposited  with  them  on  interest  or  for  investment  other  than 
property  taxed  under  the  system  just  described,  together 
with  the  name  of  every  city  and  town  in  this  Commonwealth 
where  the  several  depositors  live  and  the  aggregate  amount 
held  for  persons  residing  in  each  place.  Upon  the  total 
value  of  these  deposits  the  Tax  Commissioner  assesses  a  tax 
at  three-quarters  of  the  rate  ascertained  by  him  for  the  taxa- 
tion of  corporations  ;  i.  e.9  at  three-quarters  of  the  average 
tax  rate  of  the  State.  But  deposits  which  can  be  withdrawn 
on  demand  or  at  not  exceeding  ten  days'  notice  are  not  sub- 
ject to  this  tax. 

Certain  older  trust  companies,  whose  charters  were  granted 
before  the  passage  of  the  general  act  regulating  the  incor- 
poration of  such  enterprises,  are  taxed  in  accordance  with 
the  provisions  of  their  several  charters.  These  provisions 
differ  somewhat  in  their  details  from  the  general  provisions 
as  to  taxes  which  have  just  been  described.  But  the  differ- 
ences are  not  of  such  serious  importance  as  to  call  for  sep- 
arate description  here.  Both  as  to  the  trust  companies 
incorporated  under  separate  statutes  and  those  incorporated 


INSURANCE   TAXES.  23 

under  the  general  act,  the  system  of  taxation  is  in  the  main 
the  same.  The  tax  is  paid  by  these  corporations  directly  to 
the  Treasurer  of  the  Commonwealth  under  the  regulations 
usual  for  the  collection  of  the  general  corporation  tax.  The 
proceeds  of  the  tax  are  distributed  among  the  cities  and 
towns,  in  so  far  as  the  trust  funds  and  deposits  are  held  by 
the  companies  for  persons  residing  in  the  several  cities  and 
towns.  The  amount  of  the  tax  assessed  on  trust  funds  and 
deposits  held  for  persons  not  residing  in  the  State  accrues  to 

the  treasury  of  the  Commonwealth. 

/ 

Taxes  on  Insurance  Companies. 

Every  insurance  company  organized  under  the  laws  of  the  P.  s.,  c.  is, 
Commonwealth,   having  a  capital  stock,   is  taxable  on  the 
market  value  of  its  shares  under  the  general  corporation  tax 
law. 

Separate  taxes  are  imposed  on  certain  insurance  com- 
panies, which  may  be  described  very  briefly.  Every  mutual 
insurance  company  organized  under  the  laws  of  the  Com- 
monwealth, and  every  foreign  life  insurance  company, 
whether  mutual  or  not,  doing  business  in  the  State,  must  pay 
a  tax  of  one-fourth  of  one  per  cent,  on  the  net  value  of  all 
policies  in  force  held  by  residents  of  the  Commonwealth  on 
December  31  of  the  year  preceding  the  assessment.  This 
tax  applies  only  to  life  insurance  companies. 

Mutual  fire,  marine  and  other  insurance  companies  organ- 
ized under  the  laws  of  the  Commonwealth,  except  life  insur- 
ance companies  and  companies  taxed  on  their  capital  stock 
under  the  general  corporation  tax,  pay  a  tax  of  one  per  cent, 
on  their  receipts  for  all  premiums  and  assessments,  subject 
to  a  deduction  for  premiums  received  in  some  other  State 
and  taxed  in  a  similar  manner  there.  Companies  of  a  similar 
kind,  but  organized  under  the  laws  of  other  States  or  of  for- 
eign countries,  pay  a  tax  of  two  per  cent,  on  all  premiums 
charged  or  received  for  the  insurance  of  property  in  the  Com- 
monwealth, or  received  or  collected  by  agents  in  the  Com- 
monwealth. 

There  are  further  provisions  in  the  statutes  by  which  the 


24  TAXATION  REPORT. 

tax  on  certain  companies  incorporated  in  other  States  is 
made  no  less  than  the  highest  similar  tax  imposed  by  those 
other  States  on  Massachusetts  insurance  companies  of  the 
same  kind. 

Companies  incorporated  in  foreign  countries  are  subjected 
to  a  punitive  double  tax  (four  per  cent. ) ,  unless  they  con- 
form to  the  requirement  of  a  substantial  deposit  with  the 
trustees  or  with  the  insurance  department  of  some  State  of 
the  Union. 

All  the  taxes  on^  insurance  companies,  except  on  those 
companies  taxed  on  their  corporate  franchise,  enure  to  the 
treasury  of  the  Commonwealth,  no  distribution  of  the  pro- 
ceeds being  made. 

Yield  of  the  Insurance  Taxes  in  1896. 

Tax  on  value  of  life  policies, $171,248 

Tax  on  premiums, 268,356 

Total, 8439,604 

3,     THE  COLLATERAL  INHERITANCE  TAX. 

it'  legs'  c*  432'  ^ne  Commonwealth  levies  a  tax  on  all  property  passing  to 
it* 1896' c' IDS'  collateral  heirs  by  will  or  by  the  laws  of  intestate  succes- 
sion, or  by  deed,  grant,  sale  or  gift  made  or  intended  to  take 
effect  after  the  death  of  the  grantor,  at  the  rate  of  five  per 
cent,  on  the  market  value  of  all  the  property  thus  passing. 
Property  passing  to  near  relatives  is  not  subject  to  this 
tax.  The  statute  declares  that  such  relatives  as  the  "  father, 
mother,  husband,  wife,  lineal  descendant,  brother,  sister, 
adopted  child,  the  lineal  descendant  of  any  adopted  child, 
the  wife  or  widow  of  a  son  or  the  husband  of  a  daughter  of  a 
decedent"  are  not  within  the  scope  of  the  tax.  Property 
passing  to  all  other  relatives  or  to  strangers  to  the  blood  pays 
the  tax. 

Exemptions  from  this  tax  are  of  two  sorts:  (1)  exemp- 
tions granted  on  the  grounds  of  public  policy,  and  (2)  ex- 
emptions in  favor  of  small  legacies  and  distributive  shares. 
Under  the  former  head,  legacies  to  or  for  the  use  of  charita- 


COLLATERAL  INHERITANCE  TAX.  25 

ble,  educational,  or  religious  societies  or  institutions,  the 
property  of  which  is  exempt  by  law  from  taxation,  or  to  a 
city  or  town  for  public  purposes,  are  exempt.  Under  the 
latter  head,  no  estate,  unless  its  value,  after  the  payment  of 
all  debts,  exceeds  the  sum  of  ten  thousand  dollars,  and  no 
legacy  or  distributive  share  of  an  estate,  unless  its  value 
exceeds  five  hundred  dollars,  is  subject  to  such  tax. 

In  the  case  of  all  estates  liable  to  the  inheritance  tax,  an 
inventory  of  the  estate  must  be  filed  in  the  registry  of  pro- 
bate by  the  executor,  administrator  or  trustee  within  three 
months  of  the  date  of  his  entering  on  his  duties.  A  copy 
of  this  inventory  is  thereupon  mailed  to  the  Treasurer  of  the 
Commonwealth  by  the  register  of  probate.  By  means  of 
this  inventory  or  of  an  appraisement  of  the  estate  by  apprais- 
ers appointed  by  the  judge  of  probate,  and  of  the  provi- 
sions of  the  will  if  one  is  probated,  the  Treasurer  of  the 
Commonwealth  is  called  upon  to  assess  the  tax.  This  is 
a  proceeding  of  an  unusual  sort,  inasmuch  as  the  assess- 
ment of  the  other  State  taxes  is  in  the  hands  of  the  Tax 
Commissioner.  The  tax  thus  assessed  must  be  retained  by 
the  executor,  administrator,  or  trustee  out  of  the  moneys  due 
the  several  beneficiaries  who  may  be  subject  to  the  tax.  No 
final  settlement  of  the  estate  can  be  obtained  until  all  the 
taxes  have  been  paid,  and  the  executor,  administrator  or 
trustee  is  liable  if  he  fail  to  retain  and  pay  over  the  tax. 
The  tax  is  paid  by  the  executor,  administrator  or  trustee 
directly  to  the  Treasurer  of  the  Commonwealth.  The  pro- 
ceeds of  the  tax  accrue  to  the  use  of  the  Commonwealth,  no 
distribution  of  the  receipts  being  made. 

Yield  of  the  Collateral  Inheritance  Tax,  1891-96. 

1891,          

1892, $13,854  54 

1893, 59,429  31 

1894, 239,368  55 

1895, 419,427  11 

1896 275,573  24 


26  TAXATION   REPORT. 

4.     LICENSE  FEES. 
Fees  for  Liquor  Licenses. 

The  Commonwealth  imposes  a  tax  upon  the  privilege  of 
selling  spirituous  and  malt  liquors  within  the  Commonwealth. 
Every  person  desiring  to  engage  in  such  business  must  first 
obtain  a  license  from  the  authorities  of  the  city  or  town  in 
which  he  desires  to  do  business,  and  pay  the  license  fee  im- 
posed.    The  amount  thus  collected  is  divided  between  the 
Commonwealth  and  the  city  or  town  in  which  the  license  has 
been  granted,  the  city  or  town  receiving  three-fourths  and 
the  Commonwealth  the  remaining  one-fourth  of  the  receipts. 
st.  isss,  c.  34o.       A  statute  of  the  year  1888  limited  the  number  of  licensed 
places  in  any  city  or  town  which  votes  to  grant  licenses,  to 
one  licensed  place  for  every  thousand  persons  of  the  popula- 
tion of  the  city  or  town,  as  enumerated  in  the  last  preceding 
State  or  national  census.     There  are  some  exceptions  to  this 
general  rule.     The  most  important  is  that  for  the  city  of 
Boston,  which  is  allowed  to  have  one  license  for  every  five 
hundred  persons  of  the  population.     Certain  minor  excep- 
tions are  also  made  in  favor  of  summer  resorts  having  no 
settled  population  the  year  round.     Every  town,  however 
small,  is  entitled  to  grant  one  license. 

When  a  city  or  town  has  voted  to  allow  the  sale  of  intoxi- 
cating liquors  within  its  limits,  any  person  may  apply  for  a 
license.  Notice  of  such  application  is  published  in  a  local 
paper  or  posted  in  some  public  place  at  least  ten  days  before 
the  meeting  of  the  licensing  board.  In  the  towns,  the  grant- 
ing of  licenses  devolves  upon  the  selectmen ;  in  the  cities, 
upon  the  board  of  license  commissioners  or  police  commis- 
sioners. Every  city  voting  to  grant  licenses,  except  those  in 
which  there  is  a  license  commission  or  board  of  police  created 
by  special  statute  or  under  the  provisions  of  a  charter,  has  a 
board  of  three  persons,  appointed  for  a  term  of  six  years,  to 
perform  the  duties  which  formerly  devolved  upon  the  mayor 
and  aldermen  in  respect  to  granting  licenses.  In  Boston  and 
in  Fall  River  these  powers  have  been  given  to  the  police 
commissioners. 


LIQUOR   LICENSES.  27 

The  licenses  are  of  six  sorts.  With  the  exception  of  the  P. s., c.  100, §  10. 
sixth  class,  which  is  distinguished  by  the  person  to  whom  the 
license  is  granted,  the  classification  is  based  on  two  grounds 
of  distinction  ;  namely,  (1)  whether  the  liquor  is  to  be  drunk 
on  the  premises  or  not,  and  (2)  on  the  sort  of  liquor  to  be 
sold.  The  classification  in  the  statutes  is  as  follows  :  — 

First  Class.  —  To  sell  liquors  of  any  kind,  to  be  drunk  on  the 
premises. 

Second  Glass.  —  To  sell  malt  liquors,  cider  and  light  wines,  con- 
taining not  more  than  fifteen  per  cent,  of  alcohol,  to  be  drunk  on 
the  premises. 

Third  Class. — To  sell  malt  liquors  and  cider,  to  be  drunk  on 
the  premises. 

Fourth  Class.  —  To  sell  liquors  of  any  kind,  not  to  be  drunk  on 
the  premises. 

Fifth  Class. — To  sell  malt  liquors,  cider  and  light  wines,  con- 
taining not  more  than  fifteen  per  cent,  of  alcohol,  not  to  be  drunk 
on  the  premises. 

Sixth  Class. — To  druggists  and  apothecaries,  to  sell  liquors  of 
any  kind  for  medicinal,  mechanical  and  chemical  purposes  only, 
and  to  such  persons  only  as  may  certify  in  writing  for  what  use 
they  want  it. 

The  license  fee  varies  for  the  different  classes.  A  statute 
of  1888  fixed  the  minimum  fee  to  be  charged  by  cities  and 
towns  at  the  following  figures  :  for  a  license  of  the  first  class, 
$1,000  ;  for  a  license  of  the  second  class,  $250  ;  for  a  license 
of  the  third  class,  $250  ;  for  a  license  of  the  fourth  class,  $300  ; 
for  a  license  of  the  fifth  class,  $150  ;  for  a  druggist's  license, 
$1.  A  city  or  town  may  charge  as  much  more  than  these 
minimum  fees  as  it  may  deem  proper. 

The  following  figures  show  the  yield  of  the  tax  to  the  Com- 
monwealth, which  is  one-quarter  of  the  total  yield,  for  a  series 
of  years  :  — 

1890, $426,309  62 

1891, 543,117  85 

1892, 504,979  81 

1893, 485,385  56 

1894,  .                                 544,292  50 

1895, 682,099  36 

1896,                                                                     .         .  669,602  17 


28 


TAXATION  REPORT. 


Minor  Fees. 

There  are  some  other  taxes  and  fees  of  minor  consequence 
collected  by  the  Commonwealth ;  but  these,  our  task  being 
limited  to  a  consideration  of  the  larger  features  of  the  tax 
system,  we  shall  not  undertake  to  describe.  Some  of  them 
are  noted  in  the  summary  of  the  receipts  from  the  various 
taxes  with  which  we  conclude  this  part  of  our  report. 


Actual  Revenue  of  the  Commonwealth  for  the  Years  1895  and  1896. 


SOUHCE. 

1895. 

1896.* 

I.  General  property  tax,    
2.  Corporation  taxes,  — 
a.  General  corporation  tax, 

$1,449,710 
1,004,826 

$1,745,340 
1,075,030 

6.    Bank  stock  tax,     ..... 
c.    Savings  bank  tax,         .... 

432,103 
1,243,725 

417,398 
1,291,286 

d.  Insurance  premium  tax, 
e.  Excise  tax  on  life  insurance  companies 
/.  Foreign  railroads  tax,  . 
f.   Mining  companies  tax,  . 
Other  taxes  on  corporations, 
3.  Collateral  inheritance  tax,     . 
4.  License  fees,  — 
a.  Liquor  licenses,     
b.  Peddlers'  licenses,         .... 

259,339 
162,105 
50,874 
5,417 
66,902 
419,427 

682,099 
18,743 

267,667 
171,248 
26,749 
4,902 
63,011 
275,573 

669,602 
22,902 

c.  Other  licenses,       . 

43,614 

44,576 

5.  Judicial  fees,  etc.,  ...... 

91,652 

75,421 

6.  Income  from  public  institutions  and  property, 
7.  Interest,  .        
8.  Miscellaneous  income,  ..... 

280,066 
543,224 
193,976 

457,194 
534,900 
151,081 

Total  revenue,    

$6,977,802 

$7,293,880 

*  As  to  some  taxes  a  slight  discrepancy  will  be  noticed  between  these  figures  for 
1896  and  the  figures  following  the  discussion  of  each  tax.  This  arises  from  the  fact 
that  this  table  gives  the  amount  actually  collected  during  the  year,  while  the  former 
figures  represent  the  amount  levied.  The  difference  is  small. 


PART  II. 

THE    WORKING    OF     THE     EXISTING     TAX    SYSTEM. 

TAXES  ON  REAL  PROPERTY. 

In  the  actual  operation  of  the  tax  system,  the  taxes  on 
real  property  are  by  far  the  most  important.  Out  of  the 
total  of  taxes  on  property  and  polls  assessed  in  the  Common- 
wealth during  the  year  1896,  three-quarters  was  raised  by 
taxes  on  real  estate. 

Total  tax  assessed  on  polls  and  property,  1896, .  $39,954,339 

Assessed  on  polls, 1,434,629 

Assessed  on  personal  property,    ....  8,398,980 

Assessed  on  real  estate, 30,120,730 

We  have  noted  the  fact  that  the  law  makes  provision  for  a 
certain  discretion  on  the  part  of  the  assessors  as  to  the 
methods  of  taxing  real  estate,  and  authorizes  them  to  tax  it 
by  estimate  rather  than  by  return  on  the  part  of  the  tax 
payers.  In  practice,  the  taxation  of  real  estate  takes  place 
universally  by  estimate  and  valuation  on  the  part  of  the  assess- 
ors. We  are  glad  to  be  able  to  report  that  this  part  of  the 
tax  system  is  in  the  main  honestly  and  fairly  administered. 
It  would  be  going  too  far  to  say  that  the  assessors  of  the 
several  cities  and  towns  are  perfect,  or  to  dteny  that  grave 
mistakes  are  sometimes  made  in  the  valuation  of  real  estate. 
But  such  difficulties  as  occur  and  such  mistakes  as  are  made 
are  the  result,  not  of  the  laws  on  taxation,  but  of  defects  in 
their  administration.  No  method  of  taxation  will  work  well 
which  is  not  administered  by  competent  and  zealous  officials  ; 
as,  on  the  other  hand,  no  method  will  work  well  which  makes 
exceptional  demands  on  the  intelligence  and  character  of  the 
officials.  So  far  as  the  taxes  on  real  estate  go,  the  law  calls 
for  no  important  amendments  ;  if  its  administration  is  faulty, 
the  remedy  is  to  be  found  in  greater  diligence  by  the  voters 
and  by  the  appointing  officers  in  the  several  cities  and  towns. 


30  TAXATION  EEPORT. 

Nevertheless,  there  are  important  problems  in  connection 
with  the  taxation  of  real  estate.  In  many  farming  towns  of 
the  Commonwealth  the  burden  of  taxation  on  land  is  exceed- 
ingly heavy,  and  some  measures  of  relief  are  called  for.  In 
many  other  parts  of  the  Commonwealth,  and  especially  in 
the  cities,  the  question  arises  how  far  the  taxes  on  real  estate 
are  definitively  and  finally  paid  by  the  owners  on  whom  they 
are  first  levied,  and  how  far  they  are  shifted  by  the  owners 
to  tenants  or  to  other  persons,  and  so  distributed  in  their 
ultimate  incidence  among  the  various  classes  of  inhabitants. 


Taxation  of  Farming  Land. 

The  situation  in  many  of  the  farming  towns  is  peculiar. 
Here,  without  fault  of  the  assessors  or  of  the  towns,  and  as  a 
result  mainly  of  general  industrial  causes,  the  burden  of  tax- 
ation on  land  is  heavy,  and  in  some  towns  extraordinarily 
and  unfairly  heavy.  It  is  at  this  point  that  we  find  the 
working  of  the  taxes  upon  real  property  most  unsatisfactory. 
Some  remedy  is  called  for,  though  that  remedy  is  to  be  found 
rather  in  a  general  readjustment  of  the  burdens  of  taxation 
than  in  a  change  of  the  laws  as  to  the  taxation  of  real 
property. 

In  a  considerable  number  of  farming  towns  of  the  State 
land  is  assessed  at  more  than  its  selling  value,  and  is,  more- 
over>  taxed  at  $  high  rate  on  this  excessive  valuation.  Land 
see  page  127.  js  off;en  assessed  which,  if  put  up  for  sale,  would  find  a  pur- 
chaser only  at  a  price  below  its  assessed  value,  if  indeed  it 
found  a  purchaser  at  all.  In  such  towns  the  tax  rate  is  often 
$16,  $18,  sometimes  $20  and  over  $20  per  $1,000  on  this 
high  valuation.  The  taxes  are  excessively  and  unfairly 
heavy,  as  compared  with  the  taxes  on  real  property  in  other 
parts  of  the  Commonwealth. 

The  explanation  of  this  state  of  things,  as  we  have  already 
said,  is  to  be  found  not  in  defects  of  law,  nor  even  in  error 
or  undue  zeal  on  the  part  of  the  assessors,  but  in  the  general 
industrial  situation.  Agriculture  in  Massachusetts  is  a  de- 
clining industry,  —  regrettably  so,  but  undeniably  so.  The 


TAXES  ON  FARMING  LAND.  31 

enormous  cheapening  of  freight  rates  and  the  consequent 
competition  of  the  west,  the  fall  in  the  prices  of  transport- 
able agricultural  products,  the  growth  of  manufactures  and 
the  attraction  to  the  cities  of  a  larger  and  larger  proportion 
of  the  farming  population,  —  all  these  causes  have  brought 
about  a  decline  of  the  farming  towns,  a  diminution  in  the 
profits  of  agriculture  in  Massachusetts,  and  a  fall  in  the  value 
of  farming  property.  Land  in  the  neighborhood  of  large 
cities  and  so  having  a  good  market  for  vegetables  and  milk, 
or  land  which  is  attractive  for  summer  residents  and  of  value 
on  that  account,  has  escaped  the  general  decline ;  but  in  a 
town  which  has  no  such  advantages  of  situation  or  climate 
agriculture  declines,  population  is  stationary  or  retrograde, 
and  the  value  of  the  land  tends  to  fall. 

Such  a  town,  however,  is  called  upon  now,  as  in  times 
past,  to  maintain  its  schools,  to  repair  its  roads,  to  support 
its  poor.  It  needs  to  raise  larger  amounts  to  meet  the  pub- 
lic charges  now  than  it  needed  to  raise  thirty  or  fifty  years 
ago.  Its  resources  are  less.  The  selectmen  and  assessors 

o 

have  the  choice,  if  they  wish,  of  lowering  the  valuation  of 
farming  land  to  the  point  of  its  actual  selling  value ;  but,  if 
they  do  so,  the  only  alternative  is  to  raise  the  tax  rate.  Be- 
tween a  high  valuation  with  a  moderate  tax  rate,  and  a  mod- 
erate valuation  with  a  very  high  tax  rate,  the  former  course 
is  naturally  chosen.  Hence,  the  tax  rate  in  a  farming  town 
may  not  be  high,  or  at  least  may  not  be  so  high  as  to  attract 
special  attention,  while  yet  the  real  burden  of  taxation  may 
be  excessively  heavy.  The  result  is  that  the  farmer  in  such 
a  town  is  taxed  very  heavily  in  proportion  to  his  real  means. 
The  difficulties  of  his  situation  are,  it  is  true,  largely  due  to 
causes  beyond  the  control  of  the  Legislature.  So  long  as  the 
agricultural  conditions  remain  what  they  are  now,  farming  in 
Massachusetts  cannot  be  a  flourishing  industry.  But  these 
difficulties  at  least  should  not  be  increased  by  the  operation 
of  our  tax  system;  and  we  shall  accordingly  endeavor  to 
suggest  changes  which  will  relieve  the  Massachusetts  farmer  see  page  112. 
from  more  than  his  just  share  in  the  burdens  of  taxation. 


32  TAXATION  EEPOKT. 


How  far  Taxes  on  Real  Estate  are  shifted. 

An  entirely  different  aspect  of  the  working  of  the  real 
estate  taxes,  and  an  important  one,  appears  in  the  prosperous 
and  progressive  parts  of  the  Commonwealth.  Especially  in 
the  cities,  the  taxes,  while  paid  in  the  first  instance  by  the 
owners  of  real  estate,  may  be  shifted  by  them  to  others  in 
the  rental  for  the  use  of  the  property,  or  perhaps  further  in 
the  prices  of  articles  sold  or  made  there.  Until  it  is  known 
whether  these  taxes  fall  ultimately  to  the  owners,  or  on 
tenants  and  purchasers,  we  cannot  reach  conclusions  as  to 
the  final  effects  of  the  existing  system  on  different  classes 
in  the  community,  or  as  to  its  equity  between  them.  This 
subject,  it  is  true,  is  one  of  the  most  complicated  and  diffi- 
cult in  political  economy,  and  if  it  were  followed  to  all  its 
ramifications,  many  points  would  be  left  doubtful.  But 
there  are  some  general  facts  as  to  the  incidence  of  taxes  on 
real  estate  which  are  not  open  to  serious  doubt,  and  which 
are  of  great  importance. 

In  many  cases  the  taxes  are  in  reality  borne,  not  by  the 
owner,  but  mainly  by  some  one  else.  The  most  striking 
case  is  that  of  real  estate  for  investment  in  the  cities,  and 
especially  in  a  great  city  like  Boston.  Here  heavy  invest- 
ments are  constantly  being  made  in  land  and  in  buildings, 
with  rapid  changes  in  the  quantity  and  character  of  the 
accommodations  desired,  and  with  a  general  upward  move- 
ment in  the  population  and  therefore  in  the  demand  for  real 
estate.  While  the  rate  of  tax  varies  somewhat  from  year  to 
year,  the  fluctuations  are  not  such  as  to  make  it  impossible 
to  allow  with  reasonable  certainty  for  the  effects  of  taxation 
on  investments  in  such  property.  The  taxes  are  accordingly 
allowed  for.  In  the  purchase  of  land,  in  the  erection  of 
buildings,  in  the  making  of  leases,  taxes  are  taken  into 
account ;  and  the  calculation  is  that,  after  they  are  paid,  the 
investment  shall  bring  the  usual  rate  of  return.  While  the 
owner  pays  the  tax  in  the  first  instance,  his  rentals  in  general 
yield  him  enough  to  insure,  over  and  above  taxes,  the  ruling 
return  on  his  investment. 


SHIFTING  OF  TAXES.  33 

This  is  a  simple  and  well-known  fact,  of  great  importance 
in  its  bearing  on  the  general  equity  of  our  methods  of  taxa- 
tion, yet  often  forgotten  in  the  discussion  of  them.  It  is 
often  said  that  real  estate  is  now  heavily  taxed,  and  bears 
its  full  share  of  the  burden  of  taxation.  Real  estate  undoubt- 
edly now  is  taxed  always  substantially,  and  often  heavily ; 
and  sometimes,  as  in  the  case  of  the  farming  towns  just  dis- 
cussed, and  in  other  cases  which  we  shall  mention  presently,  Bee  page 35. 
the  owner  of  the  real  estate  feels  the  burden  unmistakably. 
But  in  a  great  number  of  cases,  while  the  property  is  taxed, 
the  owner  feels  the  tax  but  little,  or  not  at  all ;  his  outlay 
and  his  rentals  are  so  adjusted  that  he  gets  a  net  income 
equal  to  that  which  investments  of  the  same  solidity  yield  in 
other  directions.  No  doubt  mistakes  and  miscalculations 
are  made  in  real  estate  ventures,  as  in  others  ;  some  turn  out 
well,  some  ill.  Investments  in  property  in  outlying  districts 
or  for  special  purposes,  if  shrewdly  and  carefully  made,  may 
yield  a  return  above  the  average.  On  the  other  hand,  real 
estate  in  central  locations  is  usually  a  safe  and  solid  invest- 
ment, and,  like  all  such,  yields  .a  very  moderate  return. 
Variations  of  this  sort  may  disguise  the  general  trend  of 
events,  and  make  it  difficult  to  follow  in  each  particular  case 
the  relations  between  taxes,  investment  and  income.  But  it 
is  the  normal  workings  of  taxes,  their  general  tendency  and 
general  operation,  which  should  guide  the  legislation  regard- 
ing them.  This  normal  tendency,  showing  itself  sooner  or 
later,  as  to  the  great  mass  of  real  estate  held  for  investment 
purposes,  is  for  the  adjustment  of  rentals  and  the  payment 
of  taxes  in  such  a  manner  that  the  owner  receives,  net  and 
after  paying  the  taxes,  the  usual  moderate  return  on  well- 
secured  investments. 

It  is  true  that  some  questions  as  to  the  ultimate  effects  of 
such  taxes  are  in  dispute  among  the  writers  on  political 
economy  ;  but  these  doubtful  questions  are  not  of  the  sort  to 
qualify  in  important  respects  what  has  been  said  in  preceding 
paragraphs.  It  is  maintained  by  some  economists  that  the 
taxes  on  rented  real  estate  are  shifted  entirely  to  the  tenants, 
and  result  by  just  so  much  in  an  increase  of  rents.  It  is 


34  TAXATION   REPORT. 

maintained  by  others  that,  where  land  has  a  considerable 
value,  the  taxes  are  shifted  to  the  tenants  only  in  part,  and 
in  part  have  the  effect  of  lessening  the  selling  price  of  the 
site  on  which  the  buildings  stand.  The  latter  would  seem  to 
be  the  more  common  opinion.  But,  in  either  case,  the  in- 
vestment price  of  the  property  has  long  since  been  adjusted 
to  the  tax.  Where  land  has  been  bought  and  sold  for  genera- 
tions, and  buildings  have  been  erected,  repaired,  rebuilt,  also 
for  generations,  the  value  of  the  real  estate  as  a  whole  has 
accommodated  itself  to  the  long-established  tax  system,  and 
the  net  income  has  been  adjusted  in  the  manner  which  has 
been  described. 

These  general  conclusions  apply  also  to  the  taxes  on  dwell- 
ing-houses, —  a  most  important  part  of  the  real  property  of 
the  inhabitants  of  the  Commonwealth.  Investments  in  dwell- 
ings are  constantly  made,  by  persons  of  small  means  as  well 
as  by  persons  of  large  means.  In  all  cases  the  taxes  on  prop- 
erty are  allowed  for  by  the  owners,  either  in  the  rentals 
charged  to  the  tenants  or  in  the  price  at  which  the  land  has 
been  acquired.  The  investment  is  expected  to  yield  the  usual 
rate  of  return,  —  due  allowance  being  made  for  ease  or  diffi- 
culty in  collecting  the  rents,  for  the  fluctuations  in  demand 
in  different  cities  and  in  different  sections  of  the  same  city, 
and  for  the  accidents  and  uncertainties  which  in  greater  or 
less  degree  attend  all  investments.  Where  a  dwelling  is 
occupied  by  its  owner,  the  situation  is  indeed  simple.  He 
pays  the  taxes,  and  must  shoulder  them  once  for  all.  Where 
dwellings  are  occupied  by  tenants,  the  taxes  are  undoubtedly 
shifted  to  them,  wholly  or  in  large  part.  It  is  in  this  way 
chiefly  that  most  workingmen  feel  the  effects  of  taxation. 
Although  they  may  not  be  called  upon  directly  to  pay  taxes 
on  property,  they  nevertheless  pay  indirectly,  in  the  form  of 
increased  rentals  of  the  dwellings  which  they  occupy. 

The  cases  in  which  taxes  on  real  estate  are  allowed  for  and 
shifted,  with  comparative  ease,  are  thus  numerous ;  but,  on 
the  other  hand,  the  cases  in  which  the  burden  of  taxation 
cannot  be  shifted  by  the  owner  at  all,  or  only  in  part  and 
with  difficulty,  are  also  numerous.  We  have  already  referred 


KEAL  ESTATE  TAXES.  35 

to  the  situation  of  a  great  part  of  the  farming  land  of  the 
State.  This  is  heavily  taxed ;  there  is  little  possibility,  if 
any,  of  the  farmers  recouping  themselves  for  the  taxes  by 
raising  the  prices  of  their  products.  They  must  bear  the 
taxes  once  for  all.  In  all  our  cities  and  towns  many  persons 
of  moderate  means,  as  well  as  of  large  means,  own  their 
dwellings,  and  bear  the  taxes  on  them  definitively.  The 
manufacturers  of  the  State,  who  are  taxed  on  their  real 
estate  and  machinery,  carry  on  business  in  competition  with 
the  manufacturers  of  other  States  and  of  other  countries ; 
and,  while  there  is  doubtless  some  tendency  to  allow  for 
taxes  in  making  such  investments,  the  taxes  are  neverthe- 
less felt  as  a  real  and  heavy  burden  by  the  manufacturing 
interest. 

We  have  not  entered  on  this  discussion  of  the  varying 
effects  of  the  taxes  on  real  estate  with  a  view  to  recommend- 
ing any  changes  in  the  direct  taxation  of  real  estate.  We 
have  entered  on  it  partly  because  it  explains  the  attitude  of 
different  sections  and  organizations  on  questions  of  taxation, 
and  partly  because  it  will  serve  to  justify  certain  proposals 
which  we  shall  make  in  the  latter  part  of  our  report.  We  see  page  95. 
have  found  some  owners  of  real  property,  and  especially 
farmers,  complaining  of  the  burden  of  taxation  on  land,  and 
asking  for  relief.  On  the  other  hand,  we  have  found  owners 
of  real  estate  in  the  cities  asking  for  a  repeal,  in  whole  or  in 
part,  of  the  taxes  on  personal  property,  and  entirely  willing 
to  accept  the  heavier  taxes  on  real  property  which  would 
result  from  such  repeal.  The  explanation  of  these  varying 
demands  is  to  be  found  largely  in  the  different  incidence  of 
the  real  estate  taxes  in  different  parts  of  the  State.  That 
difference  in  the  working  of  the  taxes  will  also  receive  due 
weight  in  our  proposals  for  legislation.  We  shall  recommend  See  Pa^e  112- 
measures  for  making  the  general  burden  of  taxation  less 
heavy  in  the  farming  regions.  We  shall  also  recommend 
that  the  inheritance  tax,  which  will  be  included  in  our  pro- 
posals, shall  apply  to  the  real  estate  of  properties  of  con- 
siderable size  passing  on  death ;  on  the  ground  that,  while 
current  taxes  have  been  paid  on  such  real  estate,  these  taxes 


36  TAXATION   REPORT. 

have  been  largely  shifted  by  the  owners,  who  therefore  may 
still  be  called  upon  for  further  contribution  to  the  public 
burdens. 

Taxation  of  Mortgages. 

see  page  7.  ^  was  pOjnted  out  in  the  first  part  of  our  report,  the  taxa- 

tion of  mortgages  on  taxable  real  estate  is  now  treated  by 
the  statutes  as  part  of  the  taxation  of  real  estate.  A  piece 
of  mortgaged  real  estate  is  taxed  once  for  all,  and  the  mort- 
gagor and  the  mortgagee  are  allowed  to  arrange  between 
themselves  in  what  manner  the  taxes  shall  be  met.  The 
practical  effect  is  that  all  mortgages  stipulate  for  the  pay- 
ment of  the  tax  by  the  mortgagor  or  borrower.  The  mort- 
gagee is  not  directly  affected  by  the  tax,  and  may  be  said  to 
be  virtually  exempted. 

As  to  the  effect  of  this  arrangement,  it  is  contended,  on 
the  one  hand,  that  the  result  has  been  a  decline  in  the  rate 
of  interest  on  mortgages,  and  thus  a  substantial  relief  to  the 
borrowers ;  on  the  other  hand,  it  is  maintained  that  no  de- 
cline in  the  rate  of  interest  ascribable  to  this  cause  has 
occurred,  and  that  the  present  system  enures  solely  and  un- 
justly to  the  advantage  of  the  lenders. 

To  understand  the  operation  of  the  law  as  it  now  stands, 
it  is  necessary  to  recall  the  conditions  under  which  it  went 
into  operation.  The  present  method  was  adopted  in  1881. 
Before  that  time  both  the  mortgage  note  and  the  mortgaged 
property  were  taxable  for  their  full  amounts  to  their  respec- 
tive owners.  But  this  taxation  was  carried  out  under  impor- 
tant limitations.  Savings  banks,  which  are  always  large 
lenders  on  mortgages,  were  taxable  then,  as  now,  at  a  special 
moderate  rate,  the  rate  being  in  1881  three-fourths  of  one 
per  cent,  on  their  deposits.  A  savings  bank  making  a  loan 
on  mortgage  was  therefore  taxed  at  less  than  the  usual  rate, 
and  had  an  advantage  over  an  individual  making  such  a  loan 
and  paying  the  tax  contemplated  by  law.  But  the  individuals 
lending  on  mortgage  were  not  certainly  and  unfailingly 
reached  by  the  tax  on  their  mortgages.  It  is  doubtful 
whether  they  were  taxed  in  any  large  number  of  instances. 


MORTGAGES.  37 

The  taxation  of  mortgages  was  carried  out  by  estimate  and 
dooming,  and  with  great  uncertainty.  A  large  proportion, 
probably  the  larger  proportion,  of  the  mortgage  notes  held 
by  private  lenders  were  not  in  fact  taxed.  Hence,  even  an 
individual,  in  lending  on  mortgage  before  1881,  would  make 
his  loan  not  with  a  certainty  of  paying  a  tax  on  it,  but  only 
with  some  risk  of  being  assessed  for  taxation  on  account  of 
it.  The  rate  of  interest  demanded  by  him,  therefore,  was 
affected  rather  by  a  risk  of  taxation  than  by  a  certain  and 
unfailing  charge  on  his  mortgage  investment.  The  change 
in  the  rate  of  interest  on  mortgages  which  might  be  expected 
from  the  exemption  (so  called)  of  mortgages  in  1881  could, 
therefore,  be  not  a  reduction  by  the  average  rate  of  taxation 
in  the  State  (one  and  a  quarter  or  one  and  a  half  per  cent.), 
but  a  much  smaller  reduction ;  perhaps,  on  the  whole,  in  the 
case  of  private  loans  as  well  as  in  that  of  savings  bank  loans, 
a  change  equivalent  to  the  abatement  to  savings  banks, 
namely,  three-quarters  of  one  per  cent. 

A  reduction  in  the  rate  of  interest  on  mortgages  about  to 
this  extent  we  believe  did  take  place.  So  much  "has  been 
shown,  we  believe,  in  the  statistics  collected  by  those  who  ad- 
vocated the  change  of  1881  and  who  now  advocate  the  reten- 
tion of  the  present  arrangement.  It  is  further  indicated  by 
evidence  which  has  been  brought  before  us  in  our  hearings. 
It  is  not  to  be  questioned  that  the  competition  in  mortgage 
investments  has  been  greatly  increased  by  the  change  in  the 
law,  and  that  the  tendency  has  been  for  the  rate  of  interest 
on  well-secured  mortgages  to  go  down.  Trustees  and  others 
formerly  liable  to  taxation  on  mortgages,  and  so  hesitating  to 
make  them,  now  compete  for  them  actively,  and  are  willing 
to  accept  a  low  rate  of  interest.  Undoubtedly  a  general  de- 
cline in  the  rate  of  interest  for  all  investments  has  taken  place 
during  this  period,  which  accounts  in  part  for  the  lower  rate 
on  mortgages.  But  we  believe  that  the  change  in  the  tax  law 
made  in  1881  has  tended  to  bring  about  a  decline  in  the  rate 
of  interest  on  mortgages,  security  being  the  same ;  and  this 
decline  has  been  as  great  as  could  be  expected  in  view  of  the 
conditions  prevailing  at  the  time  when  the  law  was  changed. 


TAXATION  REPORT. 

We  say  security  being  the  same ;  because,  where  the 
solidity  of  the  security  has  changed,  this  factor  has  inevitably 
affected  mortgage  loans,  and  must  be  taken  into  account  in 
judging  of  the  course  of  events  since  1881.  As  it  happens, 
much  property  which  was  good  security  before  that  date  is 
no  longer  good.  Especially  in  loans  on  farming  real  estate, 
the  rate  of  interest  has  failed  to  decline,  because  the  prop- 
erty has  become  less  valuable  and  less  easily  salable  than  it 
formerly  was.  Twenty-five  years  ago  savings  banks  were 
glad  to  make  loans  secured  by  mortgage  of  farm  property ; 
at  present  they  are  usually  averse  to  doing  so.  In  the  hear- 
ings which  we  have  held  it  has  been  testified  that  after  the 
act  of  1881  savings  banks  in  some  cases  offered  to  reduce  the 
rate  of  interest  on  mortgages  on  farm  property,  provided 
that  one-half  of  the  principal  were  paid  off.  The  debtor, 
however,  found  himself  unable  to  obtain  this  half,  by  second 
mortgage  or  otherwise,  because  fresh  loans  on  farming  prop- 
erty had  become  hard  to  secure.  The  failure  of  the  rate  of 
interest  to  go  down  on  farming  property  is  due  to  the  general 
change  to  which  we  have  already  referred,  —  the  regrettable 
decline  in  agriculture  through  the  greater  part  of  the  Com- 
monwealth. This  change,  coming  into  full  operation  during 
the  same  period  in  which  the  act  of  1881  has  been  in  effect, 
has  obscured  the  general  working  of  that  measure,  and  has 
brought  about  the  impression  that  no  decline  whatever  in  the 
rate  of  interest  on  mortgages  has  ensued.  The  moderate 
general  reduction  which  we  have  mentioned  may  be  ascribed 
to  the  legislation  of  1881.  But  unfortunately,  in  the  case 
of  farming  property,  the  decline  has  been  more  than  offset 
by  the  inevitable  unwillingness  of  investors  to  increase  or 
even  to  retain  loans  on  farming  security. 

Whatever  may  have  been  the  precise  effects  of  the  act  of 
1881,  we  are  of  the  opinion  that  the  general  principle  which 
underlies  that  act  should  be  maintained ;  namely,  that  there 
should  not  be  taxes  both  on  the  mortgage  and  on  the  mort- 
gaged estate,  and  that  there  should  be  only  one  tax  on  the 
property,  whether  under  mortgage  or  not.  The  only  ques- 
tion can  be  whether  the  method  adopted  by  the  Common- 


MORTGAGES.  39 

wealth  for  bringing  about  this  end  is  the  best  one.  The 
other  feasible  method  is  that  followed  by  the  State  of  Cali- 
fornia. There  also  but  one  tax  is  levied  on  the  mortgaged 
property.  The  mortgagor,  or  borrower,  is  called  on  to  state 
who  is  the  mortgagee,  and  the  amount  of  the  mortgage ; 
each  is  taxed  in  proportion  to  his  interest  in  the  property, 
and  no  agreement  for  payment  of  ail  taxes  by  the  mortgagor 
is  recognized.  The  effect  of  this  arrangement,  it  appears, 
is  that,  while  the  lender  is  taxed  on  the  full  amount  of  his 
mortgage  note,  the  debtor  is  compelled  to  pay  a  rate  of 
interest  higher  by  the  amount  of  the  taxes,  and  even  by 
something  more.  As  compared  with  other  loans  and  invest- 
ments in  California,  mortgages  there  usually  bear  two  per 
cent,  additional  interest.  «•>  The  additional  interest  so  charged 
is  higher  than  the  tax  rate,  for  the  lenders  on  mortgages 
are  able  to  secure  not  only  enough  to  compensate  them  for 
the  taxes  imposed,  but  something  more  by  way  of  insurance 
against  possible  future  rise  in  the  tax  rate.*  What  the 
borrower  gains  through  the  payment  of  taxes  on  the  part  of 
the  lender,  he  loses,  and  something  more  also,  in  the  form 
of  a  higher  interest  charge. 

We  conclude  that  it  is  inexpedient  to  make  changes  in  the 
legislation  of  the  Commonwealth  as  to  the  taxation  of  mort- 
gaged property.  In  view  of  the  experience  of  California, 
and  of  the  general  probabilities  of  the  case,  we  believe  that 
the  taxation  of  mortgages  by  a  certain  and  unfailing  process 
would  bring  about  a  rise  in  the  interest  charge  at  least  to  the 
extent  of  the  tax.  The  present  method  in  this  Common- 
wealth has  now  been  in  effect  for  a  long  series  of  years,  and 
agreements  on  the  basis  of  it  have  been  made  to  a  great  ex- 
tent. It  works,  if  not  perfectly,  at  least  smoothly  and  cer- 
tainly. Changes  in  the  methods  of  taxation  should  not  be 
made  unless  strong  cause  for  them  can  be  shown,  and  great 
gains  can  be  reasonably  expected.  If  the  present  arrange- 

»  See  the  investigation  of  this  subject  by  Carl  C.  Plehn,  Ph.D.,  — "The  General 
Property  Tax  in  California.  Publications  of  the  American  Economic  Association  — 
Economic  Studies,"  Vol.  II.,  No.  3,  June,  1897.  The  statements  there  made  are  con- 
firmed in  letters  received  by  this  Commission  from  residents  of  California. 


40  TAXATION  REPORT. 

« 

ment  as  to  mortgages  is  defective,  in  that  persons  of  means, 
lending  on  mortgage,  do  not  contribute  proportionally  to  the 
public  burdens,  the  remedy  should  be  sought,  we  believe,  in 
other  ways  than  by  overturning  a  system  to  which  lenders 
and  borrowers  alike  have  adjusted  themselves.  Such  greater 
contributions  from  the  estates  of  persons  of  means  we  believe 
to  be  called  for ;  and  legislation  for  securing  them  we  shall 
see  page  104.  recommend  in  the  third  part  of  our  report. 


THE  TAXATION  OF  PERSONAL  PROPERTY. 

The  taxation  of  personal  property  involves  the  most  diffi- 
cult questions  in  the  tax  problems  before  the  Legislature. 
At  the  same  time,  it  is  the  part  of  the  tax  situation  as  to 
which  it  has  proved  most  difficult  to  secure  information. 
We  have  found  it  impossible,  within  the  specified  time,  and 
with  the  means  provided  by  the  law  creating  this  Commission, 
to  ascertain  all  the  facts  which  it  would  be  desirable  to  have 
in  discussing  the  taxation  of  personalty.  But  some  impor- 
tant facts  are  easily  ascertained  from  the  official  publications 
of  the  Commonwealth.  In  regard  to  others,  we  have  under- 
taken inquiries  which  have  yielded  new  and  useful  informa- 
tion. A  circular  letter  was  sent  to  each  of  the  thirty-two 
cities  of  the  Commonwealth,  asking  certain  questions  ;  among 
them,  questions  as  to  the  number  of  persons  assessed  for 
property  and  for  personal  property,  as  to  the  number  of 
sworn  statements  handed  in  by  tax  payers,  as  to  the  nature 
of  the  personal  property  taxed,  and  as  to  the  amounts  of  the 
different  kinds  of  personalty  assessed  by  sworn  statements 
and  by  assessors'  doomage.  No  circular  was  sent  to  the 
towns  ;  but,  from  returns  made  by  the  assessors  of  the  towns 
to  the  Tax  Commissioner,  and  on  file  at  his  office,  similar 
information  as  to  the  nature  of  the  taxed  personalty  was 
gathered.  The  figures  secured  by  these  inquiries  are  given 
in  detail  in  the  Appendix,  and  we  shall  have  occasion  in 
various  parts  of  our  report  to  refer  to  them.  We  shall  here 
summarize  briefly  the  important  facts  as  to  the  taxation  of 
personal  property,  derived  partly  from  the  regular  official 


SWORN  RETURNS,  41 

publications,  partly  from  independent  inquiry.  Some  of 
the  facts  are  familiar,  others  are  not  so.  We  present  them 
all,  in  order  to  give  as  complete  an  exposition  as  possible  of 
the  whole  situation. 

Sworn  Returns. 

The  first  question  that  arises  in  regard  to  the  taxation  of 
personal  property  is  how  far  it  is  based  on  sworn  statements 
by  the  tax  payers,  and  how  far  on  estimates  by  the  assessors. 
In  regard  to  real  estate,  it  makes  no  great  difference  which 
method  is  resorted  to;  and,  as  we  have  seen,  the  statutes  see  page  7. 
give  the  assessors  an  option  as  to  requiring  or  not  requiring 
a  return  of  real  property.  But  there  is  a  wide  difference 
between  taxing  personal  property  by  estimate  and  by  return  ; 
and  the  law  makes  a  formal  requirement  for  a  sworn  state- 
ment of  the  tax  payer's  personal  property,  although  unac- 
companied by  any  direct  penalty  for  failure  to  do  so. 

No  information  as  to  the  actual  practice  in  this  important 
part  of  the  administration  of  the  tax  laws  was  available  in 
the  published  reports ;  and  the  circular  sent  to  the  cities  of 
the  State  accordingly  asked,  among  other  things,  what  was 
the  number  of  sworn  returns  received.  While  the  informa- 
tion refers  only  to  the  cities,  we  believe  that  it  gives  a  good 
indication  of  the  general  usage  in  the  towns  as  well.  Indeed, 
from  testimony  given  before  us  orally,  we  infer  that  sworn 
returns  are  more  often  made  in  the  cities  than  in  the  towns. 

It  appears  that,  in  the  year  1896,  there  were  assessed  for  For  details  see 
taxes  on  property  in  the  thirty-two  cities  of  the  Common-  TaBeB.* 
wealth  220,804  persons,  including  corporations.  The  total 
number  assessed  for  taxes  of  any  kind  was  much  larger, 
namely,  604,496  ;  but,  deducting  those  assessed  for  poll  tax 
only  (383,692),  we  have  the  figures  just  given  for  those 
assessed  on  property.  Of  the  220,804  persons  so  assessed 
on  property,  the  greater  part  were  assessed  on  real  prop- 
erty only.  Those  assessed  on  personal  property  numbered 
82,211  ;  while,  among  these  latter,  those  who  were  assessed 
on  personal  property  and  on  no  other  property  numbered 
51,817. 


TAXATION  REPORT. 

Compared  with  the  total  number  of  persons  so  assessed, 
we  find  that  there  were  secured  in  these  thirty-two  cities 
5,075  sworn  returns  from  individuals  (not  counting  returns 
made  by  corporations  and  banks).  Roughly,  this  means 
that  taxation  rested  on  sworn  statements  for  no  more  than 
one-sixteenth  of  the  tax  payers  assessed  for  personalty.  If 
we  compare  the  number  of  sworn  returns  with  the  tax  payers 
assessed  on  personalty  only,  we  find  a  ratio  of  one  to  ten. 

It  does  not  appear  whether  any  of  the  sworn  statements 
came  from  tax  payers  who  declared  that  they  had  no  person- 
alty at  all,  and  therefore  would  not  figure  among  those  finally 
assessed  for  personalty.  But  it  makes  no  serious  difference 
whether  we  do  or  do  not  suppose  that  some  among  those  who 
made  returns  swore  that  they  had  no  taxable  personalty  at 
all,  and  so  did  not  figure  among  the  tax  payers  assessed  for 
personalty.  In  any  case,  the  number  of  those  taxed  by  esti- 
mate or  doomage  is  overwhelmingly  greater  than  the  number 
of  those  taxed  by  return.  In  round  numbers,  we  may  say 
that  between  ninety  and  ninety-five  per  cent,  of  those  taxed 
for  personal  property  of  any  kind  were  taxed  by  estimate  of 
the  assessors,  or  by  what  is  commonly  described  as  doomage. 

As  between  individual  cities,  an  inspection  of  the  detailed 
figures  in  the  Appendix  will  show  great  differences.  In  some 
there  are  practically  no  sworn  statements  at  all ;  in  others,  an 
appreciable  number  are  secured.  The  proportion  of  sworn 
returns  to  the  number  of  tax  payers  assessed  for  personal 
property  is  usually  greater  in  those  larger  cities  in  which 
there  are  many  persons  of  accumulated  means,  such  as  Bos- 
ton, New  Bedford,  Newton,  and  Cambridge ;  though  to  this 
general  statement  Springfield  and  Worcester  present  excep- 
tions. In  the  strictly  manufacturing  cities,  such  as  Law- 
rence, Lowell,  Fall  River  and  Chicopee,  there  are  very  few 
returns. 

In  general,  it  is  clear  that  our  present  system,  while  in 
theory  of  law  one  of  taxation  according  to  sworn  return,  is 
in  practice  one  of  taxation  by  estimate  of  the  assessors. 
Returns  are  rare.  Some  of  those  which  come  in  are  made 
by  unusually  conscientious  persons,  who  conform  at  once  to 


AMOUNT  OF  PERSONAL  PROPERTY.  43 

the  demand  made  upon  them  for  a  return  of  their  property, 
regardless  of  the  practice  of  their  neighbors.  A  considerable 
number  are  made  by  trustees,  who  have  no  such  personal  in- 
terest as  their  beneficiaries  have  in  the  amount  of  the  taxes 
charged.*  A  large  proportion  of  the  returns  (1,108  out  of 
the  total  of  5,576  in  the  year  1896)  is  made  after  assess- 
ment; i.e.,  presumably  as  a  means  of  reducing  the  taxes 
charged  by  the  assessors  on  estimate.  But  the  great  mass 
of  the  tax  payers  make  no  statement,  and  pay  without 
further  ado  what  the  assessors  have  charged  them  by  "  doom- 
age." 

Amount  and  Nature  of  Personalty  taxed. 
The  questions  next  in  importance  with  regard  to  the  taxa- 
tion of  personal  property  are  as  to  the  amounts  assessed,  and 
as  to  the  nature  of  the  personal  property  included  in  the 
assessment.     The  total  amount  of  assessed  personalty  is  reg- 
ularly stated  in  the  official  publications  of  the  Commonwealth. 
But  no  information  has  been  available  as  to  the  different  kinds 
of  personalty  taxed.     We  have  accordingly  collected  facts  See  Appendix 
on  this  point  both  as  to  the  cities  and  as  to  the  towns.     For  andB. 
the  cities,  the  facts  were   secured  through  the  circular  of 
inquiry  sent  to  them ;  for   the  towns,   they  were  secured 
from  the  triennial  returns  made  to  the  Tax  Commissioner, 

*  Little  precise  information  is  available  as  to  the  extent  to  which  the  sworn  state- 
ments come  from  trustees  and  from  other  persons ;  but  through  the  courtesy  of  Mr. 
Duncklee,  chairman  of  the  board  of  assessors  of  Boston,  we  have  secured  certain 
facts  as  to  that  city.  In  1894  (the  last  year  in  which  there  was  detailed  analysis  of 
the  sworn  returns)  the  property  assessed  by  sworn  return  in  Boston  amounted  to 
$38,312,800.  Of  this  a  large  part  ($12,122,100)  was  tangible  property,  such  as  stock 
in  trade,  machinery  and  so  on.  The  intangible  property  assessed  by  sworn  return 
amounted  to  $26,190,700.  In  this  same  year  (1894)  guardians  and  trustees  handed 
in  sworn  returns  as  to  $14,425,500  of  property.  Practically  all  of  this  consists  of 
intangible  property;  for  Mr.  Duncklee's  detailed  figures  show  that  only  $41,900  of 
tangible  property  was  sworn  to  by  those  trustees  and  guardians,  the  rest  being 
shares,  bonds,  money  due,  and  like  property.  The  remainder  (that  is,  $14,383,600) 
of  intangible  property  was  assessed  on  sworn  statements  by  trustees  and  guardians, 
or  a  little  more  than  one-half  of  the  total  ($26,190,700)  of  intangible  personalty 
assessed  on  sworn  statements  from  all  persons  in  Boston.  It  should  be  remembered 
in  this  connection  that  the  total  amount  of  personal  property  assessed  in  Boston 
was  in  the  year  mentioned,  (1894)  more  than  $204,000,000,  of  which  only  the  com- 
paratively small  amount  mentioned  above  ($38,312,800)  was  assessed  on  sworn 
returns. 


44 


TAXATION  REPORT. 


and  on  file  in  his  office  under  section  55  of  chapter  11  of 
the  Public  Statutes  (as  amended  by  chapter  91  of  the  Acts 
of  1893). 

The  total  property,  real  and  personal,  assessed  by  the  local 
assessors  in  1896  was  $2,622,520,278,  of  which  $2,040,200,- 
644  was  real  estate  and  $582,319,634  was  personal  estate. 
Roughly,  personalty  thus  bears  to  realty  on  the  average 
the  proportion  of  one  to  four.  But  this  proportion  varies 
very  much  in  the  different  cities  and  towns  of  the  State. 
In  the  cities,  the  variations,  while  considerable,  are  usually 
due  to  obvious  causes.  In  a  manufacturing  city,  like  Fall 
River,  an  unusually  large  proportion  of  personal  property 
results  from  the  valuation  of  machinery  as  personal  estate ; 
and  this  also  helps  to  explain  a  large  valuation  of  per- 
sonalty in  Lawrence,  Lowell,  and  New  Bedford.  Cities 
like  Chelsea,  Everett,  Maiden,  Medford,  and  Somerville 
show  a  proportion  of  personalty  much  below  the  aver- 
age, having  few  great  manufacturing  or  business  establish- 
ments, and  being  inhabited  mainly  by  persons  of  moder- 
ate means.  Boston,  Cambridge,  Springfield,  and  Worcester 
show  about  the  same  proportion  of  personalty  as  the  average 
in  the  State.* 

Between  the  towns  there  are  still  greater  differences.  In 
some  towns  there  is  an  insignificant  proportion  of  personalty 


*  The  amounts  of  real  and  personal  property  assessed  in  the  cities  mentioned 
were  as  follows  :  — 


CITY. 

Real  Estate. 

Personal 

Estate. 

Per  Cent,  of 
Personal 
Estate  to  Total 
Valuation. 

Fall  River  

$41,935,800 

$27,350,696 
15  965  987 

39.47 

22  84 

26,669,525 

8  214  698 

23.54 

New  Bedford  
Everett  

33,920,700 

22,360,417 
683  450 

39.73 
4.74 

Chelsea,  . 
Maiden,  

20,528,550 
21  299  200 

2,384,544 
2  500  360 

10.40 
10.50 

Medford,         
Somerville  

15,403,650 
45  224  800 

2,315,450 
3  788  250 

13.07 
7.73 

Boston,   

770,261,700 
67  835  100 

211,008,213 
15  Q14  995 

21.51 
19  01 

Springfield  

48,344,280 
74  953  100 

13,071,811 
16  825  172 

21.29 
18  34 

NATURE  OF  PERSONAL  PROPERTY. 


45 


assessed.  In  four  towns  the  personalty  is  less  than  five  per 
cent,  of  the  total  valuation  (Revere,  Winthrop,  Hull,  and 
Mashpee,  in  1895)  ;  in  a  few  more  it  is  less  than  ten  per 
cent.  ;  and  in  a  considerable  number  it  is  less  than  fifteen 
per  cent,  of  the  total.  But  the  most  striking  cases  are 
those  where  the  proportion  of  personalty  rises  far  above 
the  average.  In  a  few  towns  there  is  a  remarkable  accu- 
mulation of  personal  property.  In  sixteen  towns  in  the 
State  the  personal  property  assessed  by  the  local  assess- 
ors forms  forty  per  cent,  or  more  of  the  total  valuation ; 
that  is,  the  assessed  personalty,  instead  of  being  much 
less  in  value  than  the  assessed  realty,  is  nearly  or  quite 
equal  to  it.* 

We  now  turn  to  the  next  point  of  importance,  —  the  nature 
of  the  personalty  assessed.  In  the  circular  sent  by  us  to  the 
cities  they  were  asked  to  specify  what  amounts  of  tangible  and 
of  intangible  personal  property  were  assessed.  The  former 
class  was  described  as  including  stock  in  trade,  machinery, 
furniture  and  carriages,  live  stock,  ships  and  vessels,  and 
"  other  tangible  personalty  ;  "  while  the  latter  was  described 
as  including  money  on  hand  and  at  interest,  securities  and 
investments,  income,  and  "other  intangible  personalty." 
Replies  giving  the  desired  information  were  received  from 


*  The  amounts  of  real  and  personal  property  assessed  in  these  sixteen  towns  in 
1895  were  as  follows  :  — 


TOWN. 

ASSESSED  VALUE  OF  — 

PERCENTAGES. 

Eealty. 

Personalty. 

Realty. 

Personalty. 

Dalton  

$1,417,561 
1,173,925 

$946,598 
831,961 
1,222,820 
355,352 
386,590 
1,270,755 
1,311,938 
769,435 
2,447,918 
3,740,536 
1,108,163 
2,732,017 
11,371,089 
1,807,870 
4,284,422 
1,637,335 

59.95 
58.51 
67.80 
57.09 
56.12 
53.92 
52.54 
51.76 
49.63 
45.04 
43.07 
40.39 
40.13 
40.03 
34.09 
32.76 

40.05 
41.49 
42.20 
42.91 
43.88 
46.08 
47.48 
48.24 
50.37 
54.96 
66.93 
59.61 
59.87 
59.97 
65.91 
67.24 

Western,      

1,674,590 
472,710 
494,540 
1,487,485 
1,452,955 
825,675 
2,413,089 
3,067,078 
838,286 
1,850,694 
7,620,350 
1,206,605 
2,216,400 
797,584 

Topetield,  

Eastern  
Milton,        

Falmoutb                     .                 ... 

Lincoln,      

46  TAXATION  KEPORT. 

all  cities  except  Boston  and  Somerville.  In  the  two  latter 
cities  the  assessors'  records  unfortunately  were  not  so  kept 
as  to  make  it  possible  to  classify  the  taxed  personalty.  As 
to  the  city  of  Boston,  we  had  to  content  ourselves  with  the 
meagre  information  given  below.  Estimates  of  the  amount 
of  tangible  and  intangible  personal  property,  based  on  the 
opinions  of  the  assessors  and  on  the  returns  from  all  the 
other  cities,  have  been  made  for  the  cities  of  Boston  and 
Somerville. 

For  the  towns  of  the  State  the  returns  on  file  in  the  office 
of  the  Tax  Commissioner  make  it  possible  to  classify  the 
assessed  personal  property  in  a  similar  manner.  The  figures 
as  to  the  cities  relate  to  the  year  1896,  those  for  the  towns 
to  the  year  1895.  But  this  difference  in  date,  a  consequence 
of  the  different  modes  in  which  the  Commission  found  it 
necessary  to  procure  the  information,  does  not  materially 
affect  its  pertinence  for  the  general  problems  of  the  tax 
system. 


Assessment  of  Personal  Property  in  the  Cities. 

AppendS6ne,e        In  *De  cities  (except  Boston  and  Somerville)  the  assessed 
personalty  was  classified  as  follows  :  — 

Tangible  personalty, — 

Stock  in  trade, $35,964,749 

Machinery, 77,338,741 

Furniture  and  carriages, .        .        .        .  6,561,177 

Livestock, 6,357,015 

Ships  and  vessels, 1,872,658 

Other  tangible  personalty,       .        .        .  1,669,197 

Total  tangible  personalty,        .        . $129,763,537 

Intangible  personalty,  — 

Money  on  hand  and  at  interest,       .        .  $2,070,766 

Securities  and  investments,     .        .        .  22,810,714 

Income, 3,880,220 

Other  intangible  personalty,   .        .         .  36,258,481 

Total  intangible  personalty,     .        . 65,020,181 


Total  personal  property, $194,783,718 

Total  personalty  (including  Boston  and  Somerville),  .  397,032,218 


NATUKE  OF  PERSONAL  PROPERTY.  47 

It  will  be  seen  that  in  the  thirty  cities  (not  including 
Boston  and  Somerville)  the  tangible  personal  property  as- 
sessed was  in  the  ratio  of  two  to  one  to  the  intangible. 
Machinery  is  by  far  the  largest  item  in  the  class  of  tangible 
personalty ;  next  comes  stock  in  trade ;  the  other  items  are 
comparatively  small.  For  the  intangible  personalty  the 
classification  evidently  signifies  nothing.  Almost  all  the 
personalty  of  this  sort  is  assessed  by  estimate  or  "doomage" 
in  a  lump  sum,  and  is  variously  called  "  cash  assets,"  "  secu- 
rities," "investments,"  "stocks  and  bonds,"  the  separation 
of  the  various  items  being  nominal.  The  only  item  which 
we  may  suppose  to  be  really  treated  separately  by  the 
assessors  is  that  of  income.  The  figures  under  this  head 
probably  give  some  indication  as  to  the  independent  yield 
of  the  tax  imposed  on  incomes  from  trade  and  profession 
exceeding  $2,000  per  year. 

In  Boston,  the  assessors,  when  estimating  or  "  dooming" 
personal  property,  put  down  one  lump  sum,  not  distinguish- 
ing on  their  records  what  is  the  nature  of  the  personalty 
estimated,  whether  machinery,  stock  in  trade,  cash  assets,  or 
other  taxable  personalty ;  hence  it  is  not  possible  to  secure 
from  their  records  information  such  as  is  given  in  regard  to 
other  cities.  In  former  years,  and  until  1894,  the  assessors 
in  Boston  published  information  as  to  the  nature  of  the  per- 
sonalty taxed  according  to  sworn  returns.  In  the  last  year 
in  which  this  information  was  published  (1894)  it  appears 
that  $38,312,800  of  personal  property,  out  of  a  total  of 
$204,365,192,  was  taxed  by  sworn  return  made  by  individ- 
uals ;  and  the  sum  so  taxed  according  to  sworn  return  was 
made  up  as  follows  :  — 

Tangible  personalty,  — 

Goods,  wares  and  merchandise,        .        .  $10,330,200 

Machinery  and  office  furniture,         .        .  902,000 

Horses  and  vehicles, 443,700 

Household  furniture,          ....  393,200 

Ships  and  vessels, 51,600 

Tools, 1,400 

Total  tangible  personal  property  re- 
turned,       $12,122,100 


48  TAXATION  REPORT. 

Intangible  personalty,  — 

Bonds, $9,071,200 

Shares  of  foreign  corporations,         .        .  8,609,400 

Cash  assets, 3,572,600 

Money  due  in  excess  of  debts  due,     .        .  2,524,500 

Mortgages  taxable,  etc.,    ....  903,900 

Income, 742,100 

Money  at  interest, 721,700 

Other  intangible  personalty,      .        .        .  45,300 
Total    intangible  personal  property 

returned,          .        .        .        .        .  $26,190,700 

But  as  to  the  great  mass  of  the  personalty,  taxed  as  it  is 
by  estimate,  no  precise  information  is  obtainable.  It  is 
possible  to  get  some  indication,  though  only  a  rough  one,  by 
considering  the  amount  assessed  in  the  different  wards  of 
Boston.  Of  the  total  amount  of  personal  property  assessed 
in  Boston  in  the  year  1896  ($198,507,500,  not  including  the 
bank  assessments),  about  three-quarters  ($144,340,900)  was 
assessed  in  three  wards,  namely,  wards  6,  7  and  11.  Of 
these,  wards  6  and  7  consist  of  districts  almost  wholly  given 
over  to  business,  while  Ward  11  consists  mainly  of  the  Back 
Bay  district,  occupied  chiefly  by  the  dwellings  of  persons  of 
means.  It  may  fairly  be  inferred  that  within  the  first  two 
the  assessed  personalty  was  mainly  stock  in  trade,  machinery, 
and  other  tangible  personalty,  while  in  the  third  that  it  was 
chiefly  intangible  personalty.  The  assessments  for  these 
wards  were :  — 

Wards  6  and  7  (business  wards),    ....     $77,840,700 
Ward  11  (residence  ward), 66,500,200 

It  is  true  that  in  the  two  business  wards  there  is  some  assess- 
ment of  intangible  personalty ;  but  after  consultation  with 
the  chairman  of  the  board  of  assessors,  we  are  led  to  believe 
that  it  will  hardly  be  so  much  as  twenty-five  per  cent,  of  the 
total  personalty.  On  the  other  hand,  in  the  residence  ward 
there  are  not  a  few  shops  and  other  business  establishments 
which  are  assessed  for  tangible  personalty.  It  would  seem 
to  be  a  fair  inference,  on  the  whole,  that  in  these  three  wards 
the  tangible  personalty  assessed  is  little,  if  at  all,  less  in 


NATURE   OF   PERSONAL   PROPERTY.  49 


amount  than  the  intangible.  In  the  other  wards  of  Boston 
the  amount  of  assessed  securities  and  other  intangible  per- 
sonalty is  probably  small,  and  the  tangible  property  exceeds 
the  intangible.  For  the  entire  city  of  Boston,  therefore,  we 
may  conclude  that,  as  in  the  other  cities  of  the  State,  the 
tangible  personalty  which  is  assessed  by  the  local  assessors 
exceeds  the  intangible  ;  though  it  would  seem  to  be  doubtful 
whether,  in  the  metropolis,  the  excess  of  tangible  is  as  marked 
as  in  the  other  cities. 

As  is  to  be  expected,  in  view  of  the  small  number  of 
sworn  returns,  vastly  the  larger  part  of  the  personal  prop- 
erty is  assessed  by  estimate  or  doomage;  and  this  holds 
good  of  both  kinds,  whether  tangible  or  intangible.  As  ap-  s«e  Appendix 
pears  from  the  detailed  figures  given  in  the  Appendix,  the 
amounts  in  twenty-eight  cities  (not  including  Boston,  Lynn, 
Somerville  and  Taunton)  may  be  classified  as  follows :  — 

Tangible  personalty  assessed,       ....     $121,563,754 

(a)     By  sworn  return, 10,984,343 

(6)     By  estimate  of  the  assessors,          .        .       110,579,411 

Intangible  personalty  assessed,     ....         60,372,477 

(a)     By  sworn  return 7,311,778 

(£>)     By  estimate  of  the  assessors,         .        .         53,060,699 


Assessment  of  Personal  Property  in  the  Towns. 
The  situation  in  the  towns  is  in  some  respects  different  For  details  Bee 

Appendix  II., 

from  that  in  the  cities,  in  some  respects  the  same.  Taking  Table  A. 
all  the  towns  of  the  State,  it  will  appear  that  the  intangible 
personal  property  exceeds  the  tangible.  But,  putting  aside 
a  few  towns  in  which  the  conditions  are  peculiar,  and  con- 
sidering the  great  mass  of  towns,  we  find  the  same  propor- 
tion as  in  the  cities, — the  tangible  personal  property  is  to 
the  intangible  personal  property  as  two  to  one.  It  will  be 
remembered  that  the  information  as  to  the  towns  was  secured 
by  compilation  from  certain  returns  made  to  the  Tax  Com- 
missioner for  a  different  purpose,  which  do  not  in  all  cases 
separate  the  items  in  the  exact  manner  desirable  for  our  in- 


50 


TAXATION  REPORT. 


quiry.     But  the  figures  which  we  have  compiled  are,  never- 
theless, in  their  main  results  trustworthy  and  significant. 

The  following  general  figures  give  a  summary  statement 
of  the  situation  in  the  towns  :  — 


Tangible 
Pei-sonalty 
assessed. 

Intangible 
Personalty 
assessed. 

Total 
Personalty 
assessed. 

$64,008,262 

$83,792,441 

$147,800,703 

18  selected  towns,* 
304  remaining  towns,    . 

3,173,108 
60,835,154 

52,570,721 
31,221,720 

55,743,829 
92,056,874 

Intangible  personal  property  crowds  into  a  small  number 
of  towns ;  these,  moreover,  are,  as  a  rule,  towns  of  no  very 
large  population.  These  towns,  less  than  six  per  cent,  of 
the  whole  number,  have  over  sixty  per  cent,  of  the  securi- 
ties, investments,  cash  assets,  etc.,  assessed  in  all  the  towns, 
and  over  twenty-five  per  cent,  of  such  property  assessed 
in  the  State.  Having  a  population  in  all  of  62,529,  they 
have  an  assessed  valuation  of  $52,570,721  of  intangible  per- 
sonalty, or  not  much  less  than  the  total  of  such  property 
assessed  in  thirty  cities  (not  including  Boston  and  Somer- 
ville)  having  a  population  of  1,086,647.  In  these  few  towns 
the  intangible  personalty  enormously  outweighs  the  tangible, 
as  sixteen  to  one.  But  in  the  remaining  towns  of  the  Com- 
monwealth the  conditions  are  similar  to  those  in  the  cities, 
excepting  Boston,  the  intangible  personalty  being  to  the 
tangible  in  the  ratio  of  about  one  to  two. 

Out  of  the  total  of  $147,800,703  of  personalty  assessed  in 
the  towns,  $64,008,262  was  tangible  personalty,  $83,792,441 
was  intangible.  As  in  the  cities,  the  most  important  single 
item  of  tangible  personalty  is  machinery  ($22,885,187)  ; 
stock  in  trade  stands  next  ($21,299,223),  then  live  stock 

*  The  eighteen  selected  towns  are :  Arlington,  Belmont,  Brookline,  Cohasset, 
Easton,  Falmouth,  Groton,  Hopedale,  Lancaster,  Lincoln,  Manchester,  Mattapoisett, 
Milton,  Nahant,  Stockbridge,  Swampscott,  Wellesley,  Weston.  These  eighteen 
towns  include  ten  of  the  sixteen  towns  enumerated  on  page  45,  foot-note,  as  having 
an  exceptionally  high  percentage  of  personal  property  in  their  valuation. 


LIVE   STOCK.  51 

($14,655,746),  carriages  ($4,107,315),  ships  and  vessels 
($949,158).  Under  the  head  of  intangible  personalty  the 
largest  item  is  that  of  cash  assets  and  securities  ($52,405,119). 
But  here,  as  in  the  case  of  the  cities,  the  precise  designation 
given  to  the  intangible  property  by  the  assessors  is  of  very 
little  value  as  a  guide  to  the  true  amount  of  each  particular 
kind  of  property  actually  reached.  An  exception  may,  how- 
ever, be  made  to  this  general  statement  as  to  the  item  of 
income,  a  small  amount  in  the  towns  ($1,529,705),  which 
probably  states  the  actual  separate  assessment  of  this  part  of 
the  taxed  "  personal  property." 

From  this  summary  of  the  available  statistical  material 
we  proceed  to  a  further  consideration  of  the  taxation  of  the 
several  kinds  of  personal  property. 

Taxation  of  Live  Stock  and  Vessels. 

The  forms  of  personal  property  which  are  most  regularly 
and  unfailingly  taxed  are  live  stock  in  farming  towns,  and 
ships  and  vessels.  In  a  farming  town,  it  is  as  well  known 
how  many  cattle  a  tax  payer  has  as  how  much  land  he  owns. 
No  sworn  statement  is  needed,  and  few  are  made.  The 
assessors,  from  inspection  and  from  verbal  statements, 
ascertain  what  live  stock  each  tax  payer  owns,  and  assess 
him  accordingly.  Similarly,  ships  and  vessels  are  easily 
and  unfailingly  taxed.  The  valuations  of  these  forms  of  tan- 
gible personal  property,  and  especially  of  live  stock,  vary  in 
the  different  towns,  some  assessing  them  to  their  full  market 
value,  others  assessing  them  less  strictly.  In  the  purely 
farming  towns,  the  same  tendency  appears  in  the  assessment 
of  live  stock  as  in  that  of  real  estate  ;  in  order  to  keep  the 
tax  rate  from  rising  too  high,  the  valuation  is  strict.  The 
taxation  of  live  stock  in  such  towns  is  as  certain  and  as  bur- 
densome as  is  the  taxation  of  land  there. 

In  the  cities,  and  in  the  towns  not  mainly  agricultural,  the 
methods  of  taxing  personal  property  of  these  kinds  vary 
greatly.  Sometimes  the  assessors  count  separately  each 
horse,  cow,  carriage,  or  other  visible  piece  of  personal  prop- 


52  TAXATION  REPORT. 

erty ;  then  adding,  if  they  think  there  is  cause,  a  lump 
sum  for  intangible  property.  Sometimes  they  simply  es- 
timate the  whole  of  a  tax  payer's  personalty  in  one  lump 
sum.  The  former  method  is  followed,  for  example,  in  the 
city  of  Cambridge ;  the  latter  is  followed  in  the  city  of 
Boston  and  also  in  the  town  of  Brookline.  These  differ- 
ences in  three  large  adjoining  places  indicate  how  diverse 
is  the  working  of  the  tax  system  in  different  parts  of  the 
Commonwealth . 

In  the  farming  towns,  in  which  live  stock  is  most  fully  and 
regularly  assessed,  the  result  is  not  unjust  as  between  the 
individual  tax  payers  of  those  localities.  It  does  often  bring 
it  about,  hotvever,  that  these  towns  pay  a  larger  share  than 
is  just  of  State  and  county  taxes,  because  their  total  valua- 
tion is  high,  and  their  assessment  for  State  and  county  taxes 
see  page  112.  correspondingly  large.  For  these  real  difficulties  we  shall 
propose  some  remedy.  But  it  is  not  clear  that  anything 
would  be  gained  in  these  parts  of  the  Commonwealth  if  it 
were  enacted,  as  is  proposed  by  some  organizations,  that  all 
local  taxation  be  confined  to  real  estate,  and  all  personal 
property,  including  live  stock,  be  exempt  from  local  taxes. 
The  result  of  such  a  change  in  these  places  would  be  that,  the 
total  tax  burden  for  town  purposes  remaining  the  same,  some 
individuals  would  pay  a  larger  share  and  some  a  smaller  share 
than  at  present.  The  farmers  having  much  live  stock  as 
compared  with  their  real  estate  would  pay  less  in  proportion 
to  their  total  property  than  those  having  comparatively  little. 
On  the  whole,  therefore,  as  between  the  tax  payers  of  a  farm- 
ing town,  the  present  method  of  taxing  both  real  estate  and 
tangible  personal  property  probably  works  better  than  the 
method  of  taxing  realty  alone  would,  and  brings  more  nearly 
just  and  proportional  taxation.  Indeed,  all  authorities  are 
agreed  that  the  general  property  tax,  which  was  first  put  into 
effect  in  this  country  under  industrial  conditions  very  similar 
to  those  which  we  now  find  in  a  farming  town,  works  well 
under  these  conditions,  but  becomes  more  and  more  difficult 
of  satisfactory  application  as  property  becomes  larger  in 
quantity  and  more  complex  in  character.  Hence,  in  the 


STOCK  IN  TKADE.  53 

larger  towns  of  diversified  industries,  and  in  the  cities,  the 
difficulties  in  the  taxation  of  these  forms  of  personalty  are 
great,  and  the  actual  practice  shows  much  variety  as  between 
different  places,  —  all  these  difficulties  and  divergencies 
being  part  of  the  general  difficulty  of  applying  any  general 
property  tax. 

Taxation  of  Stock  in  Trade. 

As  appears  from  the  figures  given  above,  stock  in  trade  forms  see  pagea  46 
a  very  important  part  of  the  taxed  personal  property.  Like 
other  personalty,  it  is  taxed  chiefly  by  estimate.  Sworn 
statements,  it  is  true,  are  sometimes  handed  in.  Where  the 
estimates  of  the  assessors  are  thought  to  be  excessive,  sworn 
returns  are  made,  in  the  current  year  or  in  the  succeeding 
year,  in  order  to  secure  reductions.  Occasionally  it  happens 
that  a  firm  makes  a  return  of  a  larger  amount  of  stock  in 
trade  than  it  actually  has,  and  is  taxed  accordingly ;  while, 
at  a  later  date,  the  firm  collapses,  with  assets  less  than  the 
assessed  valuation  of  its  stock.  It  thus  appears  that  returns 
of  large  amounts  of  property  and  high  tax  assessments  are 
sometimes  devices  to  bolster  up  credit.  But  these  are  ex- 
ceptional cases.  As  a  rule,  the  assessors  make  an  estimate 
of  stock  in  trade,  and  the  taxes  assessed  by  this  estimate  are 
paid  with  little  demur ;  such  protests  as  are  made  taking  the 
form  of  remonstrance,  friendly  or  otherwise,  rather  than  of 
sworn  returns. 

We  believe,  on  the  whole,  that  this  method  of  taxing  stock 
in  trade  by  estimate,  with  the  possibility  of  correction  by 
formal  sworn  return  and  informal  conference,  works  better 
than  would  a  system  of  rigidly  enforced  statements. 

To  tax  stock  in  trade  rigorously,  in  accord  with  the  letter 
of  the  law,  would  bring  about  injustice  as  between  different 
business  enterprises.  No  deduction  from  the  assessed  stock 
in  trade  is  now  allowed  for  debts.  Doubtless  this  is  the  best 
course,  at  all  events  the  only  possible  course ;  for  to  allow 
such  deduction  would  open  the  door  to  fraud  and  evasion 
through  real,  fictitious,  or  adroitly  arranged  debts.  This,  we 
understand,  is  the  consequence  of  allowing  deduction  for 


54  TAXATION  REPORT. 

debts  from  all  personal  property  in  the  State  of  New  York. 
On  the  other  hand,  to  tax  business  men  strictly  and  uner- 
ringly according  to  their  precise  stock  in  trade  at  a  given 
date,  irrespective  of  liabilities,  might  result  in  great  inequal- 
ities. Of  two  merchants  having  the  same  stock,  one  may 
have  a  considerable  capital  and  no  debts,  while  the  other  may 
do  business  largely  on  borrowed  capital  and  may  be  subject 
to  a  heavy  interest  charge.  Of  two  businesses  of  the  same 
size  and  profit,  one  may  have  a  rapid  turnover  and  a  com- 
paratively small  stock  at  any  one  time,  while  the  other  may 
have  a  slow  turnover  and  a  larger  stock.  In  these  cases, 
and  in  the  countless  others  which  can  readily  be  imagined, 
taxation  precisely  in  proportion  to  stock  in  trade  would  be 
unequal  and  unsatisfactory. 

On  the  other  hand,  assessors'  estimate,  while  more  or  less 
uncertain,  is  not  without  some  reasonable  basis.  The  size 
of  the  premises,  the  nature  of  the  trade,  general  repute  as 
to  profits  and  volume  of  business,  give  clues  as  to  the  rela- 
tive taxable  abilities  of  different  concerns.  Capable  and 
conscientious  assessors  are  thus  able  to  assess  taxes,  if  not 
perfectly,  at  least  with  a  reasonable  approximation  to  justice  ; 
and  so  much  we  believe  is  generally  achieved  by  the  assessors 
of  the  Commonwealth  in  this  part  of  the  tax  system.  The 
experience  of  foreign  countries  in  dealing  with  business  taxes 
points  to  some  method  of  estimate  rather  than  of  return  ;  and, 
indeed,  the  inevitable  unwillingness  of  persons  in  actual  busi- 
ness to  disclose  the  details  of  their  affairs  makes  any  form 
of  rigidly  required  specific  return  unworkable  in  practice. 
France  has  had  for  generations  the  impot  des  patentes,  a  com- 
plicated set  of  business  taxes,  by  which  enterprises  are  taxed 
according  to  certain  external  indications,  such  as  the  letting 
value  of  the  premises  occupied,  the  number  of  men  employed, 
the  visible  number  and  character  of  the  machinery  in  use,  and 
so  on.  Prussia  has  lately  adopted  a  form  of  business  tax, 
by  which  there  is  a  rough  division  of  enterprises  into  classes, 
according  to  capital  and  income.  No  declaration  is  required ; 
the  business  men  themselves  are  called  on  to  co-operate  in 
assigning  each  firm  its  approximate  place  in  the  classified 


MACHINERY.  55 

scheme ;  the  whole  system  contemplates  estimate  and  not 
return.  In  its  practical  operation  the  taxation  of  stock  in 
trade  in  this  Commonwealth  proceeds  in  a  somewhat  similar 
fashion.  Much  rests  on  the  discretion  of  the  assessors  ;  and, 
where  the  assessors  are  not  experienced  and  fair-minded,  that 
discretion  is  not  always  wisely  exercised.  But  it  is  a  strik- 
ing fact  that  in  all  the  hearings  which  have  been  held  by  this 
commission,  and  in  all  the  evidence  which  has  been  brought 
before  the  various  committees  of  the  General  Court  in  recent 
years,  no  complaint  has  been  made  by  business  men  as  to 
the  working  of  this  part  of  the  tax  system.  We  have  made 
inquiries  as  to  its  operation  in  Boston,  where  the  greatest 
complications  and  difficulties  occur,  and  in  some  other  of 
the  larger  cities  ;  and  we  conclude  that  the  assessors  usually 
perform  this  exacting  part  of  their  duties  with  praiseworthy 
care  and  discretion. 


The  Taxation  of  Machinery. 

Machinery,  like  stock  in  trade,  is  taxed  usually  by  assess- 
ors' estimate.  As  in  the  case  of  stock  in  trade,  something 
about  it  can  be  ascertained  by  the  assessors  without  diffi- 
culty, — its  existence,  at  least,  and  a  rough  idea  of  its  value. 
The  exact  value  of  machinery  is  indeed  as  difficult  to  judge 
as  the  exact  value  of  merchants'  stock.  The  changes  by 
invention,  changes  in  fashion,  in  demand  for  goods  made, 
in  the  general  state  of  trade,  make  it  almost  impossible  to 
ascertain  that  fair  cash  value  which  the  tax  law  contem- 
plates. 

In  different  cities  and  towns  of  the  Commonwealth  there 
are  some  important  differences  in  the  practice  as  to  the 
assessment  and  taxation  of  machinery.  In  some  places  the 
tendency  is  to  tax  lightly ;  in  others,  to  tax  heavily.  In  a 
town  where  manufacturing  industries  are  newly  set  up,  or 
to  which  it  is  desired  to  attract  manufactures,  machinery  is 
taxed  lightly.  In  places  where  manufactures  are  old  and 
established,  the  tendency  sometimes  is  to  tax  too  heavily. 
This  is  more  especially  the  case  where  the  machinery  belongs 


56  TAXATION  REPORT. 

to  a  Massachusetts  corporation.*  Here  the  corporation  is 
certain  to  be  taxed  in  any  case  for  the  full  market  value  of 
the  shares.  If  it  is  locally  assessed  for  a  small  amount  on 
its  real  estate  and  machinery,  so  much  more  goes  by  way 
of  tax  on  corporate  excess,  or  franchise ;  if  it  is  locally 
taxed  for  a  large  sum,  so  much  less  is  left  for  corporate 
excess.  The  temptation  for  the  town  is  to  tax  the  local 
real  estate  and  machinery  heavily,  and  so  gather  for  itself 
as  large  a  share  as  possible  of  the  total  tax  collected  from 
the  corporation.  The  Tax  Commissioner,  however,  has 
authority  to  supervise  the  assessments  so  made  as  to  the 
local  property  of  corporations,  and  exercises  a  check  on 
undue  exactions  by  the  towns. 

The  exemption  of  machinery  from  taxation  has  been  pro- 
posed, and  there  are  strong  arguments  in  favor  of  such  a 
change.  The  State  of  Massachusetts  depends  for  its  pros- 
perity on  its  manufacturing  industries,  and  these  should  be 
fostered  to  the  utmost.  So  far  as  textile  industries  are  con- 
cerned, the  very  existence  of  manufacturing  is  threatened  by 
the  fact  that  the  labor  on  the  foot  hills  of  the  Alleghanies  is 

o 

from  twenty  to  thirty  per  cent,  cheaper  than  in  Massachu- 
setts, that  taxes  are  lower,  the  hours  of  working  longer,  coal 
cheaper.  This  territory  extends  for  a  thousand  miles,  and 
the  number  of  operatives  that  can  be  drawn  from  the  moun- 
tainous regions  is  fully  equal  to  that  in  Massachusetts. 
Hence  many  cotton  mills  have  been  put  up  in  North  Caro- 
lina, South  Carolina,  Georgia,  and  Alabama,  which  compete 
dangerously  with  our  own. 

The  value  of  machinery,  moreover,  is  of  the  most  doubt- 
ful kind.  It  depreciates  rapidly  each  year,  and,  even  when 
kept  in  order  and  not  superseded,  has  to  be  replaced  every 
few  years.  It  is  liable  to  sudden  and  great  changes  in  value, 

*  A  striking  example  of  how  difficult  it  is  for  the  assessors  to  tax  machinery 
at  its  real  value  may  be  found  in  a  late  sale  made  by  the  Lawrence  Manufactur- 
ing Company  of  Lowell  of  some  of  its  machinery.  Forty  thousand  spindles  in 
good  condition  were  sold  by  them  for  $25,000,  or  62£  cents  per  spindle.  This  ma- 
chinery had  been  assessed  the  year  before  (1895)  at  $6.43  a  spindle,  or  ten  times  tho 
amount  of  its  real  value.  It  was  sold  because  the  company  found  it  unprofitable 
to  make  four- yard  sheetings  at  Lowell. 


INTANGIBLE  PERSONALTY.  57 

from  improvements  and  new  inventions.  Within  the  past 
generation,  spinning  machinery  has  been  changed  three  times. 
Under  the  stress  of  modern  competition,  only  the  mills 
equipped  with  the  best  machinery  can  survive. 

We  think,  therefore,  that  machinery  should  be  exempted 
from  taxation  as  soon  as  may  be  permitted  by  the  general 
condition  of  our  tax  system  and  by  the  financial  situation  of 
the  State  and  the  local  bodies.  We  think  some  other  changes 
in  the  tax  system  are  called  for  first ;  and  it  is  clear  that 
some  substitute  must  be  found  for  the  million  a  year  of  tax 
revenue  which  now  comes  from  machinery.  We  shall  rec- 
ommend in  our  report  some  new  sources  of  taxation.  If 
the  General  Court  should  resort  to  these,  and  if  the  revenue 
accruing  from  them  should  prove  to  be  as  large  as  we  hope, 
it  will  be  possible  to  proceed  to  the  exemption  of  machinery. 
We  do  not  see  our  way  clear  to  recommending  its  immediate 
exemption,  but  we  hope  that  this  step  may  be  taken  at  the 
earliest  practicable  moment. 

Intangible  Personal  Property. 

The  most  difficult  part  of  the  tax  system,  and  that  as  to 
which  there  is  most  dispute,  is  the  taxation  of  securities, 
cash  assets,  income,  and  other  intangible  personal  property. 
Under  this  head  come  stocks  and  bonds  of  foreign  corpora- 
tions, money  at  interest,  loans  on  mortgage  of  property 
other  than  real  estate  taxable  in  the  State,  bonds  of  Massa- 
chusetts corporations,  and  income  from  trade  or  profession. 
All  these  are  by  law  now  taxable.  Shares  in  Massachusetts 
corporations  and  in  banks,  loans  on  mortgage  of  real  estate 
taxable  in  the  State,  and  deposits  in  Massachusetts  savings 
banks,  are  not  taxable  directly  to  their  holders. 

Whatever  may  be  the  truth  as  to  other  parts  of  the  tax 
system,  it  is  admitted  on  all  sides  that  this  part  is  unsatis- 
factory. From  every  quarter  there  are  demands  for  change. 
Some  organizations  maintain  that  such  property  is  now 
taxed  too  heavily,  and  should  be  relieved ;  others  that  it  is 
too  lightly  taxed,  and  should  be  further  reached.  The  dis- 


58  TAXATION  EEPORT. 

tribulion  of  the  proceeds  of  the  taxes  on  such  property 
between  the  different  cities  and  towns  of  the  Commonwealth 
is,  in  our  opinion,  clearly  unjustifiable.  Moreover,  this  is  a 
part  of  the  tax  system  which  invites  change,  because  it  does 
not  work  with  such  certainty  and  regularity  as  to  enable  the 
tax  payers  to  accommodate  their  affairs  to  it.  Any  tax  of 
long  standing  and  of  steady  and  unfailing  operation,  to 
which  the  affairs  of  tax  payers  and  of  the  community  have 
been  adjusted,  should  not  be  changed  without  strong  cause. 
On  the  other  hand,  any  tax  which  is  uncertain  and  irregular 
in  its  operation  is  not  only  objectionable  in  itself,  but  invites 
and  justifies  prompt  and  radical  change. 

Here,  as  elsewhere,  the  taxes  are  usually  assessed  by  esti- 
mate or  "doomage."  It  is  not  possible  to  state  how  many 
in  the  limited  number  of  sworn  statements  refer  specially  to 
this  kind  of  property ;  but  the  figures  already  cited  as  to 
the  amount  of  intangible  personalty  assessed  by  statement 
and  by  doomage  show  conclusively  that  the  latter  method 
is  practised  in  the  overwhelming  majority  of  cases.  The 
amount  of  intangible  personalty  assessed  by  statement  in 
twenty-eight  cities  was  $7,311,778,  while  the  amount  assessed 
by  doomage  was  $53,060,699.  In  each  of  the  cities  a  few 
persons  of  unusual  conscientiousness  make  returns.  Such 
persons  are  accordingly  taxed  fully,  and,  as  a  rule,  much 
more  heavily  than  their  less  conscientious  neighbors.  In  the 
city  of  Boston,  and  to  some  extent  in  other  cities,  trustees 
not  infrequently  make  returns,,  especially  if  their  accounts 
are  on  record  in  the  probate  courts  and  so  are  open  to  the  in- 
spection of  the  assessors.  From  the  testimony  which  assess- 
ors have  given  before  us,  there  is  grave  suspicion  that  some- 
times sworn  statements  are  falsely  made,  and  that  perjury  is 
thus  committed  for  the  sake  of  evading  or  reducing  taxation. 
But,  after  all,  sworn  statements,  for  whatever  reasons  made, 
are  rare  in  proportion  to  the  total  assessment,  and  in  practice 
the  common  method  of  taxing  this  sort  of  property,  as  of  tax- 
ing other  sorts,  is  "  doomage"  by  the  assessors. 

It  is  obvious,  however,  that  this  method  of  taxation  en- 
counters, as  to  intangible  property,  exceptional  and  indeed 


METHODS   OF  ASSESSMENT.  59 

almost  insuperable  difficulties.  There  are  no  such  external 
indications  of  taxable  liability  as  appear  in  the  case  of  live 
stock,  vessels,  stock  in  trade  or  machinery.  General  repute 
as  to  the  possession  of  large  means,  or  a  mode  of  life  indi- 
cating an  ample  income,  do  not  necessarily  signify  anything 
as  to  taxable  securities.  The  investments  of  a  person  of 
means  may  be  in  real  estate  within  or  without  the  State,  or 
in  Massachusetts  stocks  or  mortgages,  or  in  bonds  of  the 
United  States.  An  ample  income,  indicated  by  general 
expenditure,  may  be  derived  either  from  such  sources  already 
taxed  or  not  taxable,  or  from  trade  and  profession,  or  from 
taxable  securities,  — these  last  two  being  taxable,  but  taxable 
at  very  different  rates.  The  assessors  hence  must  rely  on 
their  knowledge  and  judgment  in  estimating  the  taxable 
property  of  this  form.  In  a  great  and  complicated  society, 
wTith  a  mass  of  investments  ramifying  in  all  directions,  the 
assessors  are  here  confronted  with  a  task  which  the  best 
of  them  could  not  execute  satisfactorily.  Even  the  most 
capable,  most  experienced,  and  most  conscientious  assess- 
ors could  not  have  sufficient  knowledge  and  judgment.  But 
only  average  capacity  can  be  expected ;  experience  is  often 
lacking ;  and,  even  for  conscientious  assessors,  the  tempta- 
tions to  laxity  are  in  many  cases  irresistible.  Consequently, 
the  taxation  of  this  form  of  property  is  in  high  degree  un- 
certain, irregular,  and  unsatisfactory.  It  rests  mainly  on 
guesswork ;  it  is  blind,  and  therefore  unequal.  Here  is  its 
greatest  evil,  though  not  its  only  evil.  It  is  hap-hazard  in 
its  practical  working,  and  hence  demoralizing  alike  to  tax 
payers  and  to  tax  officials. 

In  support  of  this,  our  first  general  conclusion  on  the  tax- 
ation of  intangible  personalty,  we  will  now  present  some 
further  facts. 


Methods  and  Results  of  Assessment  and  Estimate. 

In  some  cities  —  we  may  specify  certain  of  the  larger  cities, 
as  Boston,  Cambridge,  Worcester  —  the  assessors  try  to  fol- 
low the  law  strictly  in  making  their  estimates  of  intangible 


60  TAXATION   REPORT. 

personal  property.  They  try  to  ascertain  what  are  the  means 
of  a  given  individual,  and  how  far  he  has  invested  in  real 
estate,  in  mortgages,  in  foreign  securities,  in  bonds;  and 
they  estimate  his  taxable  property  accordingly.  They  pick 
up  information  here  and  there,  from  casual  conversation, 
adroit  question,  perhaps  remarks  overheard  on  the  street,  as 
to  the  affairs  of  persons  thought  to  possess  property.  They 
are  apt  to  keep  private  memoranda  of  such  hints,  which  they 
use  in  making  their  estimates.  They  resort  to  all  lawful 
means  of  ascertaining  the  precise  possessions  of  the  tax 
payers.  Of  these  means,  the  most  important  is  in  the  rec- 
ords of  the  probate  courts.  As  to  estates  under  probate 
supervision,  the  inventories  and  accounts  of  executors, 
administrators,  and  trustees  often  give  precise  or  at  least 
available  information.  In  many  cities  these  records  are 
systematically  followed,  and  memoranda  are  taken  of  the 
information  there  contained.  By  using  one  source  and 
another,  the  assessors  endeavor  to  fulfil  their  duty  under 
p. 8., 0.11, 941.  the  statutes,  —  "to  ascertain  as  nearly  as  possible  the  par- 
ticulars of  the  personal  estate  .  .  .  and  make  an  estimate 
thereof  at  its  just  value." 

The  amount  of  taxable  property  of  all  kinds  in  the  city  of 
Boston  is  so  great,  and  the  methods  of  assessment  in  conse- 
quence are  so  different  from  those  of  other  parts  of  the  State, 
that  we  think  it  desirable  to  make  some  statement  as  to  the 
tax-assessing  machinery  of  that  city.  The  city  has  nine 
.  principal  assessors  and  forty-two  first  assistant  assessors. 
In  addition,  there  are  second  assistant  assessors  and  clerks ; 
but  these,  though  their  duties  are  important,  take  little  part 
in  the  procedure  which  we  are  now  describing.  The  city 
is  parcelled  into  assessment  districts,  each  of  which  is  in 
charge  of  a  first  assistant  assessor.  The  first  assistant  assess- 
ors, with  the  aid  of  second  assistants  and  clerks,  make  the 
initial  assessments  and  report  them  to  the  principal  assess- 
ors. The  assessments  of  personal  property  (of  all  sorts) 
are  then  finally  brought  before  the  so-called  ' t  dooming 
board."  This  board  consists  of  all  the  principal  assessors  and 
the  first  assistant  assessors, — fifty-one  in  all, — and  meets 


METHODS   OF   ASSESSMENT.  61 

daily  for  a  period  of  about  six  weeks,  from  the  middle  of  June. 
Here  each  and  every  assessment  of  personalty  reported  by 
the  first  assistant  assessors  for  a  sum  exceeding  $5,000  is 
reviewed.  Where  the  initial  assessment  is  for  less  than 
$5,000,  the  estimate  of  the  first  assistant  assessor  is  not 
further  considered  ;  but  where  it  exceeds  that  sum,  the  doom- 
ing board  revises  it,  each  name  and  the  assessed  personalty 
being  presented  and  considered  in  detail.  Any  member  of 
the  board  who  has  information  may  then  state  it,  and  the 
first  assistant  assessor  in  charge  may  defend  his  estimate  and 
make  further  recommendations.  Doubtful  cases  are  referred 
to  the  nine  principal  assessors  for  further  consideration  and 
final  decision.  The  principal  assessors  may  indeed  review 
anv  of  the  findings  of  the  dooming  board,  whether  expressly 
referred  to  them  or  not ;  but  in  practice  they  rarely  do  so, 
unless  such  reference  is  made.  In  the  practical  working  of 
this  machinery  the  estimate  of  the  first  assistant  assessor  is 
clearly  of  the  greatest  weight.  If  he  sets  a  valuation  of  less 
than  $5,000,  it  is  conclusive,  unless  the  principal  assessors 
happen  to  revise  his  estimate.  If  he  makes  a  higher  esti- 
mate, and  so  causes  the  tax  payer's  name  to  come  before  the 
dooming  board,  his  opinions  necessarily  have  great  weight. 
The  other  members  of  the  board  may  offer  information  or 
make  suggestions ;  but,  in  the  routine  of  long  and  weary 
sessions,  the  business  is  apt  to  be  disposed  of  by  accepting 
the  recommendations  of  the  official  immediately  in  charge 
The  dooming  sessions  are  secret ;  only  the  members  may 
attend ;  and,  beyond  the  final  assessment  of  a  lump  sum  for 
personal  property,  no  record  or  statement  of  the  proceedings 
is  made  public. 

Members  of  this  Commission  have  attended  meetings  of 
the  Boston  dooming  board,  and  can  bear  testimony  to  the 
zealous  and  faithful  performance  of  duty  by  its  members. 
The  assessors  endeavor  to  exercise  care  and  discrimination. 
This  is  especially  the  case  with  regard  to  the  valuation  of 
stock  in  trade  and  other  tangible  personalty,  where  there  is 
at  least  some  external  indication  of  taxable  possessions,  and 
various  means  exist  for  ascertaining  the  business  standing  of 


62  TAXATION  REPORT. 

different  tax  payers.  As  to  intangible  personalty,  they  con- 
fess that  they  are  often  entirely  in  the  dark,  and  never  can 
be  sure  whether  they  are  acting  with  undue  severity  or  with 
undue  leniency. 

Whether  in  Boston  or  elsewhere,  the  assessors  as  a  rule 
have  no  illusions  in  regard  to  the  success  of  their  efforts. 
Some  of  them,  indeed,  in  testimony  before  us,  have  ex- 
pressed the  opinion  that  they  succeed  in  ascertaining  most 
of  the  taxable  securities  and  investments,  and  in  assessing 
them  in  the  manner  contemplated  by  law ;  but,  as  a  rule, 
they  confess  frankly  that  they  fail  to  do  so.  As  to  a  few  in- 
dividuals, they  have  more  or  less  accurate  information,  from 
probate  records  or  from  accidental  disclosure ;  as  to  the 
great  majority,  they  guess.  They  are  aware  that,  in  the 
sum  total,  their  guesses  are  very  much  short  of  the  existing 
intangible  property  which  is  lawfully  taxable ;  but  in  each 
individual  case  — called  upon  by  the  statute,  as  they  are,  to 
make  an  estimate  "  according  to  their  best  information  and 
belief,"  and  rightly  unwilling  to  do  injustice  by  going  beyond 
their  information  —  they  do  not  see  their  way  to  higher 
assessment.  They  are  impelled  by  some  strong  motives,  of 
which  we  shall  speak  presently,  not  to  raise  their  assess- 
ments, especially  in  the  case  of  persons  of  large  means,  to 
such  a  point  that  the  tax  payer  thinks  of  changing  his  domi- 
cile. Complaints  are  constantly  made  to  them,  by  those 
whom  they  assess,  that  the  neighbors  of  the  complainants, 
though  perhaps  richer,  are  less  heavily  taxed.  But  the  com- 
plainants do  not  wish  to  tell  tales,  and  refuse  to  give  names 
or  details.  The  assessors  do  not  know  who  is  richer,  or 
whether,  even  if  a  man  be  clearly  richer,  his  investments  are 
taxable.  They  are  in  large  measure  helpless.  The  result  is, 
as  we  have  said,  uncertainty,  inequality,  dissatisfaction. 
Seepage^.  We  have  spoken  hitherto  of  the  localities  where  the  as- 

sessors do  their  best  to  fulfil  the  difficult  and  indeed  almost 
impossible  task  imposed  on  them  by  law.  In  other  localities 
they  fairly  give  it  up.  In  still  others  they  do  more,  — they 
try  to  attract  people  of  means  by  lax  assessments  ;  but  this 
involves  an  aspect  of  the  working  of  the  tax  system  which 


METHODS   OF   ASSESSMENT.  63 

we  shall  discuss  presently  in  another  connection.  Even  see  page  es. 
where  the  assessors  are  reasonably  faithful  and  diligent, 
they  often  abandon  the  attempt  to  secure  specific  informa- 
tion as  to  individual  tax  payers.  They  tax  by  general  esti- 
mate, roughly  and  not  heavily,  according  to  common  repute 
as  to  means  and  income.  It  may  be  that,  by  so  doing,  they 
secure  results  no  less  just,  possibly  more  just,  than  those 
secured  by  more  eager  and  diligent  assessors.  Where  the 
attempt  is  made  to  carry  out  the  letter  of  the  present  law  in 
every  known  case,  the  inequalities  between  individuals  are 
greater,  the  accident  of  discovery  becomes  important,  and 
the  taxes  are  more  pronouncedly  irregular, — too  heavy  on 
some,  too  light  on  others. 

That  the  great  bulk  of  intangible  property  taxable  by  law 
is  not  reached,  is  admitted  on  all  hands.  It  is  proved  beyond 
doubt  by  the  sensitive  records  of  the  stock  and  bond  market. 
Securities  of  all  sorts,  taxable  in  Massachusetts  but  not  tax- 
able in  New  York  and  in  other  States,  are  publicly  bought 
and  sold  every  day  at  the  same  prices  in  different  markets. 
If  taxed  according  to  law  in  Massachusetts,  at  a  rate  of  from 
one  to  one  and  a  half  per  cent,  of  their  selling  value,  they 
could  not  possibly  command  the  price  in  Massachusetts  which 
they  command  in  other  States  ;  nor  could  they  be  sold  side 
by  side  with  shares  in  Massachusetts  corporations,  or  with 
mortgage  loans,  at  such  prices  as  to  yield  about  the  same 
interest  on  the  same  investment.  As  a  matter  of  fact,  secur- 
ities of  the  same  solidity  and  yielding  the  same  income  are 
sold  side  by  side,  with  no  material  difference  in  quotations, 
whether  they  are  taxable  or  not  taxable.  Taxable  securities 
are  bought  and  sold  every  day,  not  on  the  basis  of  being 
taxed  in  fact,  but  only  on  the  basis  of  some  incalculable  and 
disregarded  possibility  of  their  being  reached  by  taxation. 

Distribution  of  Intangible  Personalty  among  the  Towns. 

We  have  already   described  the   tendency  of  intangible  see  page  so. 
property  to  concentrate  in  certain  towns  of  the  Common- 
wealth.    This  tendency  is  an  important  part  of  the  working 


64  TAXATION   REPORT. 

of  the  present  system,  and  will  now  receive  our  further  con- 
sideration. 

Ineffective  as  is  the  taxation  of  securities,  its  weight  is 
nevertheless  felt,  both  as  an  actual  burden  and  as  an  imminent 
possibility.  The  temptation  is  always  strong  to  lighten  it  as 
much  as  possible.  The  statutes  offer  a  simple,  lawful,  and 
effectual  method  of  accomplishing  this.  The  taxation  of 
such  personal  property  follows  the  domicile  of  the  owner. 
By  establishing  a  domicile  in  a  town  or  city  where  the  tax 
rate  is  low,  or  where  the  assessments  are  easy-going,  the 
taxes  may  be  reduced  greatly,  perhaps  brought  to  insignifi- 
cant dimensions.  The  larger  a  person's  means  and  the  less 
the  ties  of  business  or  profession,  the  easier  it  is  to  select  a 
domicile  at  will.  The  climate  and  scenery  of  Massachusetts 
offer  many  delightful  spots  for  persons  of  means  and  of 
leisure.  The  more  such  persons  take  up  their  residences  in 
one  of  these  places,  the  larger  is  the  amount  of  personal 
property  there  taxable,  the  lower  is  the  tax  rate,  the  slighter 
is  the  need  for  stringent  assessments. 

We  have  already  given  some  facts  as  to  the  crowding  of 
intangible  property  into  certain  towns.  To  these  may  be 
added  some  further  facts,  showing  the  differences  in  the  tax 
rate  which  result.  The  rate  of  tax  varied  in  1896  from  a 
minimum  of  $4.62  per  $1,000  to  a  maximum  of  $26  per 
$1,000.  In  certain  towns  where  there  was  a  large  accumula- 
tion of  securities  the  tax  rate  was  as  follows  :  — 


Brookline,  .  .  .  $12  40 

Coh asset,  .  .  .  .  9  70 

Easton 10  80 

Falmouth,  .  .  .  7  70 

Groton,     .  .  .  .  9  00 

Hopedale,  .  .  10  00 

Lancaster,  .  .  .  10  80 

Lincoln,    .  .  .  10  00 


Manchester,  .  .  $8  20 

Mattapoisett,  .  .  .  7  00 

Milton,      .  .  .  .  9  00 

Nahant,     .  .  .  .  7  50 

Stockbridge,  .  .  .  11  00 

Swampseott,  .  .  .  12  00 

Wellesley,  .  .  .  11  00 

Weston,    .  .  .  .  8  70 


Most  of  these  towns  show  a  very  low  rate,  and  all  show 
a  rate  much  below  the  average. 


DISTRIBUTION  OF  PERSONALTY. 


65 


As  a  contrast  to  these  towns  may  be  mentioned :  — 


Abington, 

Adams, 

Athol, 

Attleborough, 

Charlemont, 

Florida,     . 

Gardner,  . 

Granville, 

Hawley,    . 

Holliston, 


$22  60 
21  00 
23  50 

21  00 
23  00 

22  00 

22  00 
26  00 

23  00 

24  40 


Leominster, 
New  Ashford,  . 
North  Attleborough 
North  Brookfield, 
Saugus,    . 
Stoughton,        . 
Wendell,  . 
Winchendon,    . 
Wrentham, 


$21  75 
22  00 

24  00 
22  00 

22  00 

25  50 
21  00 

23  00 
21  80 


It  should  be  borne  in  mind,  moreover,  that  the  tax  rate 
and  the.  reported  amount  of  assessed  intangible  property  do 
not  tell  the  whole  story.  The  tax  rate  may  not  be  low,  but 
the  valuation  may  be,  and  the  actual  burden  of  taxation  con- 
sequently light.  While  there  may  be  but  a  small  assessment 
of  personal  property  in  the  form  of  securities,  there  may 
yet  be  a  large  amount  owned  by  inhabitants  of  a  town  and 
not  touched  by  the  assessors. 

We  have  reason  to  believe  that  the  crowding  of  personal 
property  into  certain  towns  takes  place  not  merely  as  the 
result  of  the  law  itself,  but  of  negligent  and  even  culpable 
administration  of  the  law.  It  is  currently  stated  that  per- 
sons of  means,  before  taking  their  domicile  in  some  towns, 
come  to  an  understanding  with  the  assessors  as  to  the  amount 
for  which  they  shall  be  taxed.  The  law  provides  that,  where 
a  person  changes  his  domicile  from  one  place  to  another,  he 
shall  not  be  assessed  in  his  new  place  of  residence  (in  the 
absence  of  a  sworn  statement)  for  a  less  amount  of  personal 
property  than  had  been  assessed  in  his  former  place  of  resi- 
dence. But  this  applies  only  to  the  first  year,  —  after  that 
the  assessors  are  free ;  and  even  in  the  first  year  it  is  not 
certain  that  the  law  is  always  followed.  The  truth  is  that 
the  present  system  offers  great  temptations.  A  rich  man, 
coming  into  a  small  town  and  building  a  handsome  house 
there,  adds  in  any  case  so  much  to  its  taxable  resources. 
The  assessors  have  everything  to  gain  and  nothing  to  lose 
by  attracting  such  men  as  residents.  Bargains  are  doubtless 


66  TAXATION  KEPORT. 

very  rare ;  but,  what  with  ignorance  as  to  the  amount  of 
property  which  is  taxable,  unfamiliarity  with  the  standards 
of  metropolitan  wealth,  desire  to  attract  new  residents,  and 
the  competition  of  other  places,  it  results  that  assessments 
for  personal  property  sometimes  are  not  made  at  all,  and 
very  commonly  are  made  at  figures  much  less  than  moderate. 

This  situation  again  has  its  effect  on  the  assessors  in  the 
cities  and  in  other  places  where  the  tax  rate  is  high,  and 
where  some  attempt  is  made  in  general  to  tax  according  to 
the  letter  of  the  law.  A  heavy  assessment  may  be  met  by  a 
change  of  residence  to  another  town.  The  larger  number  of 
attractive  places  within  easy  reach  of  the  cities,  and  especially 
of  Boston,  makes  such  a  change  a  comparatively  simple  mat- 
ter. Where  the  assessors,  rightly  or  wrongly,  push  a  tax 
payer  hard,  he  can  give  notice  that  he  proposes  to  take  up 
his  domicile  elsewhere  ;  and  the  assessors  are  helpless.  His 
object  may  not  be  to  evade  his  just  share  of  the  public 
burden.  It  may  be  simply  to  avoid  such  a  full  disclosure 
of  his  affairs  as  results  from  the  detailed  sworn  statement 
which  alone  the  assessors  may  accept ;  it  may  be  that  he 
believes  —  and  in  good  part  is  justified  in  believing,  as  we 
shall  presently  explain  —  that  taxation  as  now  prescribed 
by  law  works  injustice.  In  any  case,  the  larger  a  man's 
means,  the  easier  it  is  to  make  a  change  of  residence. 
Persons  of  small  means,  or  those  tied  to  any  place  by 
business  or  profession,  cannot  bring  such  pressure  on  the 
assessors.  Hence  here  again  we  have  a  cause  of  embar- 
rassment for  the  tax  officials,  of  inequality  in  assessments, 
of  irritation  among  the  citizens. 

The  concentration  of  well-to-do  tax  payers  and  of  their 
personal  property  in  a  limited  number  of  towns  has  a  further 
important  consequence.  These  persons  are  likely  to  be  the 
owners  of  shares  in  Massachusetts  corporations,  as  well  as 
of  other  securities.  Under  the  system  of  taxation  as  to 
Massachusetts  corporations,  the  proceeds  of  the  tax  on 
corporate  excess  are  distributed  among  the  cities  and  towns 
according  to  the  domicile  of  their  owners.  These  towns  con- 
sequently secure,  in  virtue  of  the  residence  in  their  limits 


INTANGIBLE  PEKSONALTY. 

of  many  large  owners  of  Massachusetts  stock,  a  dispropor- 
tionate share  of  the  general  corporation  tax.  The  following 
figures  suffice  to  show  how  unequal  is  the  operation  of  the 


tax  system  in  this  regard  :  — 


67 


Distribution  of  the  Corporation  Tax. 


Population, 
1895. 

Tax  Distributed, 
1896. 

Tax  Dis- 
tributed per 
Capita. 

State  

2,500,183 

$2,585,795  63* 

$1   03 

Thirty-two  cities, 

1,635,767 
864,416 

1,778,359  23 
807,436  40 

1   08 

93 

Eighteen  towns,  .... 
Three  hundred  and  three  towns, 

62,529 
801,887 

332,310  77 
475,125  63 

5  31 

59 

The  eighteen  selected  towns  get  five  times  as  much  as  the 
average  for  the  State,  per  head  of  population,  of  the  pro- 
ceeds of  the  tax  on  corporate  excess.  As  compared  with 
the  remaining  towns,  less  fortunate  in  the  ownership  of 
securities  by  their  inhabitants,  these  few  towns  get  nearly 
ten  times  as  much  per  head  of  population. 

The  taxation  of  personal  property  in  the  form  of  securi- 
ties and  investments  is  thus  a  failure.  It  is  incomplete, 
uncertain,  not  proportional  to  means  as  between  individuals, 
grossly  unequal  in  its  effects  on  different  parts  of  the  State. 
The  experience  of  Massachusetts  in  this  regard  is  the  same 
as  that  of  the  other  States  of  the  Union.  Everywhere, 
without  exception,  the  testimony  is  that  this  part  of  the 
system  of  the  general  property  tax  is  unequal,  unsuccessful, 
often  demoralizing  to  tax  officials,  always  irritating  to  tax 
payers. 

The  experience  of  Massachusetts  is  the  more  striking, 
because  here  the  difficulty  does  not  lie  mainly  in  the  ad- 
ministration of  the  tax  laws.  The  assessors  are  usually 
honest,  competent,  zealous.  We  have  heard  much  of  grave 
abuses,  of  almost  corrupt  laxity,  in  other  States.  But  in 


*  Although  the  amount  certified  as  due  cities  and  towns  was  $2,729,665.85,  only 
$2,585,795.63  was  actually  distributed.  These  figures  are  all  on  the  basis  of  actual 
distribution. 


68  TAXATION  REPORT. 

this  Commonwealth,  notwithstanding  occasional  defections 
(some  of  which  we  have  just  referred  to),  the  standard  of 
public  duty  continues  to  be  high,  and  the  cause  of  failure  is 
not  to  be  found  mainly  in  official  dereliction.  It  lies  in  the 
system  itself. 

The  question,  however,  still  remains,  whether  the  cause  of 
failure  is  in  the  general  system  of  the  taxing  securities  to  the 
holder,  or  in  the  particular  mode  in  which  that  system  has 
been  applied  in  this  Commonwealth.  It  is  maintained  by 
some  that  the  root  of  the  difficulty  lies  in  the  method  of 
valuation  and  assessment  of  personal  property  by  the  local 
assessors,  and  in  the  facilities  for  avoiding  the  burden  of 
taxation  by  a  change  of  residence.  The  remedy,  in  this 
view,  is  to  be  found  in  more  stringent  assessment  by  State 
officers,  at  some  uniform  rate,  with  severe  penalties.  It  is 
maintained  by  others  that  the  whole  system  is  bad,  irrespec- 
tive of  the  complications  arising  from  local  assessment ;  that 
the  taxation  of  securities  involves  double  taxation,  is  unjust, 
and  in  any  case  is  impossible  of  satisfactory  execution  ;  and 
that  no  machinery  for  assessment  by  State  officials  at  a  uni- 
form rate  is  desirable  or  practicable.  We  are  here  concerned 
mainly  with  a  presentation  of  the  facts  as  to  the  working  of 
the  tax  system,  and,  therefore,  we  postpone  a  consideration 
of  remedies,  as  well  as  of  intrinsic  justice  and  of  ulterior 
effects,  to  the  third  part  of  our  report. 


TAXES  ON  MASSACHUSETTS  CORPORATIONS  AND  BANKS. 

We  have  seen  that  the  methods  of  taxing  corporations 
chartered  by  the  State,  and  banks,  are  in  their  main  lines 
similar.  We  shall  accordingly  consider  them  together, 

The  taxation  of  shares  in  domestic  corporations  and  in 
banks  is  in  striking  contrast  with  that  of  bonds,  foreign 
stocks,  and  other  securities  taxable  to  the  holder.  Here  there 
is  no  demand  for  a  statement  from  the  individual  tax  payer, 
no  doomage  by  local  assessors,  no  guesswork,  no  possibility 
of  evading  or  diminishing  taxes  by  change  of  domicile,  no 
question  of  double  taxation.  The  real  estate  and  machinery 


CORPORATION   TAXES.  69 

are  assessed  locally  ;  doubtless  not  with  perfect  equality  and 
justice,  but  probably  as  carefully  as  would  be  possible  under 
any  system.  The  corporate  excess  is  taxed  at  a  uniform  rate 
by  the  State.  The  taxes  are  regular  and  certain.  They  are 
heavy,  and  they  yield  a  large  revenue.  The  rate  of  taxes  on 
corporate  excess  for  the  last  fifteen  years  has  been  from  year 
to  year  not  far  from  $15  per  $1,000,  or  about  one  and  one- 
half  per  cent,  on  the  capital.  The  assessment  in  1896  was 
$3,829,528.02.  Yet  little  complaint  is  heard  regarding  these 
taxes,  —  a  signal  proof  that  the  tax  payers  accommodate 
themselves,  if  not  with  ease,  at  least  without  serious  com- 
plaint, to  burdens  which  are  steady,  regular,  predictable,  and 
for  which  in  consequence  they  are  able  to  make  calculations 
and  adjust  their  affairs. 

The  corporation  tax  is  particularly  simple  and  is  assessed 
with  unerring  exactness,  in  the  case  of  large  and  well-known 
corporations,  whose  shares  are  regularly  dealt  in,  and  conse- 
quently have  a  publicly  recorded  value.  Railways,  banks, 
the  larger  manufacturing  corporations,  and  others  whose 
stocks  are  frequently  quoted,  are  taxed  without  a  word  of 
inquiry  and  without  a  possibility  of  escape.  A  very  large 
number  of  miscellaneous  corporations  are  in  a  somewhat 
different  position.  Their  shares  are  held  by  a  few  individ- 
uals, are  rarely  transferred,  and  are  without  a  quotable  mar- 
ket value.  In  these  cases  the  statement  required  by  law 
from  the  corporation  itself  as  to  the  market  value  of  its  shares 
is  important.  The  Tax  Commissioner  may  further  require  a 
transcript  of  the  balance  sheet,  and  other  information  which 
he  deems  desirable.  No  doubt  there  is  a  possibility  of  under- 
statement by  a  corporation  of  the  value  of  its  stock,  and  a 
possibility  of  manipulation  of  the  balance  sheet.  There  is 
reason  to  believe  that  sometimes  the  taxes  on  corporate  ex- 
cess are  partially  evaded  in  this  way ;  but  the  evasions  are 
insignificant,  in  comparison  with  those  as  to  taxable  securi- 
ties. In  any  case  they  affect  but  a  small  proportion  of  the 
total  taxes  collected  from  Massachusetts  corporations.  As  a 
whole,  this  part  of  our  tax  system  is  an  excellent  example 
of  the  method  of  taxing  corporations  at  the  source,  and  of 


70 


TAXATION  REPORT. 


refraining  from  any  dealings  with  the  individual  holder  of 
corporate  securities,  — a  method  admitted  on  all  hands  to  be 
the  simplest,  most  efficient,  and  most  equitable  in  the  taxation 
of  corporate  property. 

There  are,  however,  some  questions  as  to  the  present  mode 
of  distributing  the  proceeds  of  the  taxes  on  corporate  excess 
to  which  we  think  it  necessary  to  call  the  attention  of  the 
General  Court.  They  are  distributed,  it  will  be  remembered, 
among  the  several  cities  and  towns  according  to  the  owner- 
See  page  67.  ship  of  shares  by  their  inhabitants.  We  have  already  referred 
to  some  anomalous  results  of  this  method  of  distribution. 
It  causes  disproportionately  large  sums  to  be  turned  over  to 
a  few  towns  much  resorted  to  by  persons  of  means.  But, 
even  apart  from  this  difficulty,  there  are  others  which  make 
it  doubtful  whether  under  any  circumstances  corporate  excess 
should  be  made  a  direct  source  of  revenue  to  the  towns  and 
cities. 

With  many  corporations  there  is  a  very  large  corporate 
4Metcaif,564.  excess.  All  railways,  by  an  old  decision  of  the  courts,  are 
exempt  from  local  taxation  on  their  right  of  way ;  and,  in 
any  case,  the  value  of  their  real  estate  and  machinery,  tax- 
able locally,  is  not  a  great  proportion  of  their  total  valua- 
tion. This  is  even  more  strikingly  true  in  the  case  of  street 
railways.  The  cities  and  towns  where  the  shareholders 
happen  to  reside,  perhaps  distant  from  the  places  where  the 
enterprises  are  carried  on,  get  the  main  benefit  of  the  taxes. 

Disproportion  of  a  different  sort  appears  as  to  some  manu- 
facturing corporations.  A  mill,  owned  by  a  corporation, 
may  bring  to  a  town  a  considerable  population  of  working 
people,  and  a  need  for  schools,  streets,  sewers  and  water. 
It  is  true  that  it  may  bring  also  some  increase  of  the  taxable 
dwellings,  but  this  may  be  comparatively  small.  If,  in  the 
taxation  of  mill  property,  there  is  a  considerable  corporate 
excess  over  and  above  the  property  locally  taxed,  the  town 
feels  that  it  is  deprived  of  resources  which  should  fairly  be 
called  on  to  aid  in  meeting  its  additional  expenses. 

Still  another  anomaly  appears  with  regard  to  trading  and 
mercantile  corporations.  A  firm  or  individual,  carrying  on 


CORPORATION  TAXES.  71 

mercantile  or  manufacturing  business,  is  taxable  locally  on 
its  real  estate  and  machinery  only.  Its  stock  in  trade 
simply  forms  a  part  of  its  general  assets,  and  is  one  ele- 
ment among  the  many  which  go  to  make  up  the  value  of 
its  shares.  As  mercantile  corporations  are  likely  to  own 
little  or  no  real  estate  and  machinery,  the  corporate  ex- 
cess is  likely  to  be  large,  and  the  taxes  are  distributed 
mainly  to  the  cities  or  towns  where  the  shareholders  reside. 
In  most  parts  of  the  State  the  shareholders  reside  in  the 
cities  and  towns  where  the  business  is  carried  on,  and  the 
distribution  raises  no  question ;  but  in  the  city  of  Boston 
many  mercantile  corporations  are  owned  by  shareholders  who 
reside  in  the  suburban  cities  and  towns.  The  latter  get  the 
large  corporate  excess,  while  the  stock  in  trade  is  not  taxable 
in  Boston.  It  may  be  that  the  city  of  Boston  does  not  suffer 
seriously  from  this  situation,  for  the  mercantile  corporations 
usually  occupy  expensive  real  estate,  and  as  tenants  or  owners 
contribute  indirectly  or  directly  to  the  taxes  of  Boston.  But 
the  suburban  cities  or  towns  which  get  the  corporate  excess 
certainly  seem  to  be  little  entitled  to  the  sums  turned  over 
to  them  in  this  way. 

On  the  whole,  the  present  method  of  distributing  corporate 
excess  seems  to  us  to  be  based  on  a  doubtful  principle,  and 
to  work  badly  in  practice.  It  is  based  on  the  legal  fiction 
that  the  situs  of  personal  property  is  the  domicile  of  its  owner. 
But  this  theory  has  already  been  disregarded,  so  far  as  the 
tax  laws  are  concerned,  in  various  ways.  It  is  not  followed 
in  the  provisions  as  to  stock  in  trade,  live  stock  and  machin- 
ery, or  in  the  taxation  of  savings  banks  and  of  insurance 
companies.  It  results  in  an  arbitrary  apportionment  of 
large  sums  of  money,  with  little  visible  regard  to  the  real 
claims  and  needs  of  the  several  cities  and  towns.  We  shall  See  Pa^e  116« 
accordingly  make  recommendations  for  a  change  in  this  part 
of  the  tax  system ;  for  the  retention  of  the  tax  on  corporate 
excess  by  the  State  in  the  first  instance,  and  for  the  utiliza- 
tion of  the  general  financial  resources  of  the  State,  with  a 
regard  to  the  just  needs  of  the  local  bodies. 


72  TAXATION  REPORT. 


SAVINGS  BANKS. 

see  page  20.  The  taxes  on  savings  banks  also  are  simple,  certain  and 

smooth-working.  The  only  question  which  has  arisen  in 
regard  to  them  is  as  to  the  rate,  —  whether  the  depositors  in 
these  institutions  are  of  such  a  class  as  to  be  entitled  to  the 
moderate  rate  of  taxation  with  which  the  Legislature  has  con- 
tented itself  in  their  case. 

We  believe  that  the  deposits  in  savings  banks  are  used  to  a 
considerable  extent  by  persons  not  poor,  and  not  entitled  to 
any  special  favors  from  the  tax  laws.  No  statistics  are  avail- 
able showing  how  many  persons  have  considerable  deposits 
in  savings  banks,  and  how  many  have  deposits  so  small  in 
amount  as  to  indicate  very  narrow  means ;  but  general  testi- 
mony shows  that  very  considerable  deposits  come  from  com- 
paratively well-to-do  persons.  It  is  not  uncommon  for  one 
person  to  have  deposits  up  to  the  maximum  allowed  by  law 
($1,000,  which  may  increase  to  $1,600  by  accumulation  of 
interest)  in  each  of  several  savings  banks,  perhaps  having  in 
each  not  only  a  deposit  in  his  own  name,  but  others  in  the 
name  of  different  members  of  his  family.  Inquiry  among 
the  assessors  of  the  smaller  towns  shows  that  savings  bank 
facilities  are  often  resorted  to  in  this  manner  as  a  means  of 
solving  the  troublesome  question  of  the  taxation  of  securities 
and  investments.  In  such  towns  the  affairs  of  the  inhabi- 
tants are  much  more  fully  known  to  each  other  and  to  the 
assessors  than  in  the  large  towns  and  cities,  and  investments 
in  taxable  securities  are  more  likely  to  be  reached  by  the 
assessors.  Savings  banks  offer  an  investment  which  is  safe, 
and  yields  a  moderate  return ;  and  hence  their  facilities  are 
used  as  a  means  of  putting  an  end  to  all  questions  as  to  tax- 
ation. 

On  the  other  hand,  it  is  to  be  considered  that  the  taxes  on 
savings  banks  are  unerringly  collected.  A  moderate  tax, 
unfailingly  collected,  is  much  better  than  a  heavy  tax,  irreg- 
ularly and  spasmodically  collected.  While  the  rate  of  the 
savings  bank  tax  is  one-third  of  the  average  legal  rate  on  tax- 


SAYINGS   BANK  DEPOSITS.  73 

able  securities,  it  is  doubtful  whether  one-third  of  the  taxable 
securities  are  in  fact  reached.  Regarded  in  its  relation  to 
income,  the  savings  bank  is  certainly  not  a  low  one.  If  a 
savings  bank  earns,  after  paying  expenses,  five  per  cent,  for 
its  depositors,  the  tax  levied  by  the  State,  of  one-half  of  one 
per  cent,  on  the  principal,  takes  away  ten  per  cent,  of  the 
income.  The  bulk  of  savings  bank  deposits  earns  less  than 
five  per  cent,  after  paying  expenses,  and  the  tax  is  therefore 
more  than  ten  per  cent,  on  the  income.  It  is  a  tax,  too, 
which  cannot  possibly  be  shifted  (as  taxes  on  real  property 
so  often  are),  and  which  comes  once  for  all  from  the  de- 
positors. 

On  the  whole,  therefore,  we  think  there  is  no  call  for 
serious  criticism  of  the  present  savings  bank  tax.  The  tax 
is  at  a  moderate  rate  ;  but  it  is  still  a  substantial  one.  It  is 
justified,  on  the  one  hand,  by  the  fact  that  savings  bank  facil- 
ities are  used  not  only  by  the  poor,  but  also  among  the  pros- 
perous classes  in  the  community ;  on  the  other  hand,  it  is 
justified  by  the  safeguards  with  which  the  State  through  its 
legislation  has  surrounded  savings  bank  investments. 


74  TAXATION  REPORT. 


PART   III. 

PROPOSALS   AND   RECOMMENDATIONS. 

In  this,  the  concluding  part  of  our  report,  we  shall  discuss, 
first,  the  various  proposals  for  fresh  legislation  which  have 
been  brought  to  our  attention  from  one  quarter  and  another ; 
and  second,  present  the  recommendations  for  legislation, 
which,  after  a  consideration  of  these  proposals  and  of  the 
working  of  the  existing  system,  we  have  concluded  to  be 
advisable. 

THE  SINGLE  TAX. 

Among  the  proposals  for  legislation  which  have  been  made 
is  that  for  a  single  tax  on  the  value  of  land.  This  proposal 
contemplates,  not  the  exclusive  taxation  of  real  estate,  but 
the  exclusive  taxation  of  that  part  of  the  value  of  real  estate 
which  is  ascribable  to  the  land  alone.  Full  arguments  in 
favor  of  this  system  of  taxation  have  been  presented  to  us, 
and  bills  have  been  submitted  indicating  the  precise  manner 
in  which  it  is  planned  to  put  it  in  effect . 

We  have  great  respect  for  the  earnest  intentions  and  the 
public  spirit  of  the  men  who  have  advocated  this  plan.  But 
we  do  not  believe  that  any  extended  comment  on  it  is  called 
for,  or  any  detailed  statement  of  the  reasons  for  not  recom- 
mending it  for  adoption.  It  proposes  virtually  a  radical 
change  in  the  ownership  of  land,  and,  therefore,  a  revolu- 
tion in  the  entire  social  body.  In  this  form  of  taxation  all 
revenue  from  land  alone  is  to  be  appropriated ;  that  is,  the 
beneficial  ownership  of  land  is  to  cease.  Whether  or  not 
this  system,  if  it  had  been  adopted  at  the  outset  and  had 
since  been  maintained,  would  have  been  to  the  public  advan- 
tage, may  be  an  open  question  ;  but  it  would  certainly  seem 
to  be  too  late  now  to  turn  to  it,  in  the  manner  proposed. 
In  any  event,  it  involves  properly  not  questions  of  taxation, 
but  questions  as  to  the  advantage  or  disadvantage  of  private 


EXEMPTED   INSTITUTIONS.  75 

property  in  land.  We  believe  that  the  General  Court,  in 
providing  for  this  commission,  desired  rather  information 
and  discussion  as  to  the  tax  system  in  its  working  under 
existing  social  conditions,  than  consideration  of  the  abstract 
justice  and  the  general  expediency  of  the  private  ownership 
of  land.  We  propose,  therefore,  to  leave  this  subject  to  be 
discussed  before  the  Legislature  and  the  public  as  one  of  the 
fundamental  problems  of  society,  involving  much  more  than 
taxation,  and  to  confine  ourselves  to  the  narrower  but  suffi- 
ciently difficult  subject  of  the  best  modes  of  taxation  on 
property  as  it  is  now  organized,  and  now  recognized  by  law. 


EXEMPTED  INSTITUTIONS. 

We  have  heard  extended  arguments  in  regard  to  the  pres- 
ent provisions  of  law  which  exempt  from  taxation  houses  of 
religious  worship,  and  make  large  exemptions  for  literary, 
benevolent,  charitable  and  scientific  institutions.  It  has 
been  represented  that  the  exemption  of  houses  of  worship  is 
inconsistent  with  the  general  principle  of  the  separation  of 
church  and  State,  and  does  injury  to  the  cause  of  religion. 
It  has  been  suggested  also  that  expensive  houses  of  worship 
should  be  differently  treated  from  those  of  more  modest 
character.  The  exemptions  extended  to  educational  and 
charitable  institutions  are  alleged  to  work  hardship  for  some 
of  the  cities  and  towns  in  which  the  real  estate  of  such  insti- 
tutions is  situated,  and  some  different  modes  of  arranging 
the  exemptions  for  such  institutions  have  been  brought  to 
our  attention. 

We  recommend  no  changes  in  existing  legislation  on  these 
subjects.  The  general  exemption  of  houses  of  worship  is  a 
fit  recognition  by  the  State  of  the  sanctity  of  religion.  So 
far  as  handsome  and  expensive  houses  of  worship  are  con- 
cerned, we  believe  that  no  more  objectionable  and  ineffective 
endeavor  to  reach  the  incomes  of  the  rich  could  be  devised 
than  that  of  singling  out  for  taxation  the  great  churches 
and  cathedrals  which  have  been  erected  by  the  voluntary 
contributions  of  rich  and  poor  alike,  and  which  give  evi- 


76  TAXATION   KEPORT. 

dence  of  a  devout  spirit,  and  of  a  just  pride  in  its  manifes- 
tation through  beautiful  forms.  As  regards  educational  and 
charitable  institutions,  the  general  principle  of  exemption 
has  not  been  seriously  questioned  before  us,  and  the  only 
doubt  has  been  as  to  possible  hardship  in  its  operation  in 
certain  cities  and  towns.  It  is  conceivable  that  cases  of 
hardship  might  arise,  but  we  have  not  been  convinced  that 
any  have  arisen  in  fact.  At  all  events,  no  evils  or  inequities 
have  appeared  in  such  degree  as  to  call  for  the  intervention 
of  the  Legislature,  or  justify  a  departure  from  a  long-settled 
principle.  In  some  cases  of  apparent  hardship  we  believe 
the  real  difficulty  to  lie  in  the  general  situation  of  a  large 

see  page  so.  part  of  the  agricultural  sections  of  the  State,  which  we  have 
described  in  another  part  of  our  report.  The  appropriate 
methods  of  improving  that  situation,  and  of  lessening  the 

see  page  112.  burden  of  taxation  in  the  agricultural  towns,  we  have  also 
considered  elsewhere. 


PUBLIC-SERVICE  CORPORATIONS. 

Among  the  proposals  which  have  been  urged  before  us  is 
that  for  securing  a  larger  revenue  by  special  taxation  of 
public-service  corporations,  or,  as  they  are  often  called, 
quasi-public  corporations.  These,  it  is  maintained,  enjoy 
special  privileges  and  franchises  and  commonly  secure  large 
profits,  and  hence  they  should  contribute  more  largely  than 
they  do  now  to  the  public  revenues.  Taxes  on  dividends, 
on  gross  revenue,  on  net  revenue,  have  been  suggested,  all 
designed  to  secure  larger  amounts  than  are  brought  in  by 
the  present  general  system  of  taxing  corporations. 

These  proposals  deserve  the  careful  attention  of  the  Gen- 
eral Court.  But  they  involve  not  only  questions  of  taxation, 
but  other  important  questions  as  well ;  nor  is  it  possible  to 
treat  the  questions  of  taxation  separately.  One  reason, 
whether  well  or  ill  founded,  on  which  it  is  urged  that  such 
corporations  should  be  taxed  in  some  special  ways,  is  that 
they  yield  unusually  high  profits.  This  ground  has  also 
been  urged  for  requiring  them  to  reduce  the  charges  for 


PUBLIC   SERVICE   CORPORATIONS.  77 

their  goods  or  services,  or,  what  comes  to  the  same  thing, 
give  better  facilities  at  the  same  charges.  On  the  other 
hand,  it  is  maintained  that,  if  the  Legislature  calls  on  such 
corporations  for  unusual  taxes,  or  lower  charges,  or  better 
facilities,  or  a  combination  of  these,  it  should  also  give  a 
guarantee  for  the  security  of  investments  in  the  property  of 
such  corporations,  by  extending  their  franchises  for  a  fixed 
period  and  engaging  to  put  no  new  burdens  on  them  for 
such  period.  Finally,  it  has  been  argued  that  no  method  of 
dealing  with  industries  of  this  sort  is  satisfactory  so  long  as 
they  are  left  in  private  hands,  and  that  public  ownership 
and  management  is  the  only  wise  policy ;  and  that,  pending 
the  change  to  public  ownership,  the  Legislature  should  keep 
its  hands  free,  neither  exacting  special  contributions  nor 
making  special  promises. 

We  have  mentioned  these  various  aspects  of  the  problem 
in  order  to  make  it  more  clear  why  we  have  not  thought  it 
within  our  province  to  consider  the  proposals  looking*  to 
special  taxation  of  these  corporations.  They  cannot  be  con- 
sidered alone,  or  otherwise  than  as  part  of  a  larger  problem. 
The  questions  of  taxation  pure  and  simple,  without  special 
regard  to  the  nature  and  the  privileges  of  different  kinds 
of  property  and  income,  are  sufficiently  difficult.  We  have 
thought  that  the  General  Court  desired  mainly  inquiry 
and  recommendations  as  to  these  questions,  which  concern 
primarily  and  mainly  the  tax  system.  The  appointment, 
pending  our  own  investigations,  of  another  Commission  to 
investigate  one  very  important  part  of  the  public-service 
corporations  —  the  street  railways  —  would  seem  to  be  con- 
clusive evidence  that  the  General  Court  deemed  this  problem 
a  separate  one.  We  have,  therefore,  not  considered  any 
peculiar  or  exceptional  methods  of  taxing  public-service 
corporations,  and  have  assumed  that  under  any  conditions 
(except  those  of  public  ownership  and  management)  they  are 
to  be  subject  to  taxation  to  the  same  extent  and  on  the  same 
principles  as  are  applied  to  persons  and  property  in  general. 


78  TAXATION  REPORT. 


THE  TAXATION  OF  SECURITIES. 


see  page  57.  ^e  nave  airea(jy  sa>i^9  jn  Our  discussion  of  the  working 

of  existing  taxes,  that  the  taxes  on  intangible  personal  prop- 
erty —  securities,  income  and  the  like  —  form  the  most  diffi- 
cult and  the  most  unsatisfactory  part  of  the  present  tax 
system.  It  is  the  part,  also,  as  to  which  a  decision  must  be 
first  reached.  If  some  settled  policy  is  reached  as  to  this, 
it  becomes  comparatively  easy  to  make  the  needed  rearrange- 
ment as  to  other  parts  of  the  tax  system.  If  no  settlement 
is  reached  here,  the  way  to  other  changes  is  blocked. 

Three  main  proposals  have  been  brought  before  us  as  to 
this  sort  of  property  :  (1)  To  tax  such  property  more  care- 
fully and  more  strenuously  than  it  is  now  taxed.  To  accom- 
plish this,  a  system  of  State  supervision  has  been  proposed. 
The  appointment  of  State  assessors  has  been  suggested,  who 
shall  act  jointly  with  the  local  assessors,  aiding  and  con- 
trdlling  their  assessments  and  preventing  the  evasion  of  taxes 
by  changes  of  domicile.  A  uniform  State  rate  of  taxation 
on  such  property  has  also  been  proposed.  (2)  To  exempt 
from  taxation  shares  in  foreign  corporations,  on  the  ground 
that  these  represent  the  ownership  of  property  which  exists 
outside  the  State  and  is  already  taxed  outside  the  State. 
Other  securities,  such  as  bonds,  loans  on  mortgage,  and  the 
like,  are  to  be  left  taxable,  as  now.  There  is  associated  with 
this  proposal  one  for  the  exemption  of  income  derived  from 
the  use  of  property  already  taxed.  The  suggestions  under 
this  second  head  proceed  on  the  ground  that  the  present  sys- 
tem causes  double  taxation,  both  as  to  foreign  shares  and  as 
to  income  derived  from  the  use  of  property  already  taxed, 
and  that  such  double  taxation  is  inexpedient  and  unjust 
(3)  To  discontinue  entirely  the  taxation  of  all  securities 
now  taxable  to  the  holders,  and  to  substitute  therefor,  first, 
a  system  of  franchise  .taxes  on  public-service  corporations  ; 
and  second,  an  inheritance  tax  which  shall  bring  a  substan- 
tial contribution  from  realized  and  accumulated  property. 

These  proposals  cannot  be  discussed  separately.     Before 
reaching  a  conclusion  as  to  a  system  of  State  supervision  of 


STOCKS  AND  BONDS.  79 

assessments  we  must  decide  whether  there  is  now  double 
taxation  of  securities.  The  immediate  effects  and  the  ad- 
ministrative practicability  of  taxing  shares  and  bonds  present 
one  set  of  questions ;  the  justice  of  such  taxation,  its  ex- 
pediency in  a  larger  sense,  raise  different  questions.  The 
fundamental  question  that  should  be  answered  first  is,  What 
general  attitude  should  the  State  adopt  toward  securities 
which  represent  investments  outside  its  limits? 

The  attitude  which  the  Commonwealth  now  takes  as  to 
shares  of  its  own  corporations  when  owned  by  persons  living 
outside  its  borders  should  be  instructive  here.  That  attitude 
is  simple.  The  Commonwealth  taxes  the  shares  —  that  is, 
taxes  the  corporation  on  the  market  value  of  its  shares  — 
irrespective  of  the  residence  of  the  shareholder.  An  owner 
of  shares  in  a  Massachusetts  corporation,  living  in  New 
York,  is  taxed  precisely  as  an  owner  living  in  Boston  is 
taxed.  The  State  retains  the  tax  on  the  foreign  shareholder 
in  its  own  treasury,  instead  of  distributing  it  among  the 
cities  and  towns,  as  it  does  with  shares  owned  by  its  own 
citizens ;  and  this  method  of  distribution  within  the  State 
serves  to  make  it  evident  that  there  is  a  distinct  portion 
of  the  corporation  taxes  which  represents  the  taxation  of 
foreign  shareholders.  On  the  other  hand,  Massachusetts 
holders  of  shares  in  foreign  corporations  are  taxed  by  the 
law  of  the  Commonwealth  on  the  full  value  of  their  shares. 
Wherever  the  owner  may  be,  if  the  corporation  is  chartered 
within  the  State,  the  Commonwealth  collects  the  tax  on 
the  shares.  Wherever  the  corporation  may  be,  if  the 
owner  is  within  the  State,  the  Commonwealth  also  col- 
lects the  tax  (in  theory  of  law,  at  least).  The  Common- 
wealth has  adopted,  maintained,  and  carefully  elaborated 
its  own  corporation  tax,  surely  on  the  ground  that  it 
believes  this  to  be  the  best  method  of  taxing  the  owners 
of  corporate  property,  and  would  therefore  commend  this 
method  for  adoption  by  other  States.  Yet,  if  all  States 
followed  the  Massachusetts  method  in  taxing  corporations 
and  securities,  it  is  evident  that  throughout  the  country 
all  shares  owned  by  persons  living  outside  the  State  where 


80  TAXATION  REPORT. 

the  corporation  was  chartered  would  be  doubly  taxed; 
taxed  first  to  the  corporation  in  the  State  where  organ- 
ized, taxed  second  to  every  owner  who  lived  outside  that 
State.  The  Commonwealth,  by  its  own  corporation  tax, 
has  estopped  itself  from  denying  that  its  system  of  taxing 
shares  involves  double  taxation. 

But  the  question  is  not  one  merely  of  consistency.  It  is 
a  large  and  difficult  question  of  public  policy  and  public 
expediency.  It  arises  not  only  as  to  shares,  but  as  to 
bonds,  as  to  loans  on  the  pledge  of  property  outside  the 
State,  as  to  securities  of  various  sorts.  In  our  great  federal 
union,  with  a  government  partly  national,  partly  State,  we 
find  vast  masses  of  property  owned  wholly  or  in  part,  directly 
or  indirectly,  by  persons  living  outside  the  State  where  the 
property  is  situated.  In  justice  to  individuals,  in  comity 
toward  sister  States,  in  the  practical  administration  of  the 
tax  system,  what  should  be  our  general  position  as  to  such 
property  ? 


Present  Mode  of  Taxing  Foreign  Securities  not  Sound. 

We  believe  that  it  is  a  mistake  in  principle,  and  not  merely 
an  act  of  inconsistency,  to  endeavor  to  tax  such  property  pre- 
cisely as  the  property  within  the  State  is  taxed.  We  believe 
it  to  be  true  that  the  effect  would  be  double  taxation.  We 
believe  that  the  policy  of  taxing  property  as  such,  once 
and  once  only,  which  the  Commonwealth  has  adopted  as  to 
its  own  corporations  and  as  to  mortgaged  real  estate  within 
its  limits,  is  the  sound  one.  We  are  not  prepared  to  recom- 
mend the  entire  exemption  from  all  taxation  of  foreign  stocks 
and  other  securities  ;  but  we  are  unhesitatingly  of  opinion  that 
the  present  method  of  taxing  them  is  bad  in  principle  as  well 
as  ineffective  in  practice. 

We  believe  that  this  general  conclusion  holds  good  not 
only  of  stocks  in  foreign  corporations,  but  of  bonds,  loans 
on  mortgage,  and  other  evidences  of  ownership  or  interest 
in  property  without  the  State.  One  of  the  proposals  brought 
before  us,  as  has  just  been  said,  has  been  for  the  adoption  of 


STOCKS  AND  BONDS.  81 

a  separate  policy  as  to  stocks  alone,  — the  exemption  from 
taxation  of  these  and  these  only.  But  we  are  unable  to 
admit  any  conclusive  grounds  for  a  different  policy  here  from 
that  as  to  other  securities. 

It  is  true  that  the  legislation  of  several  States  makes  a  r 

difference  between  stocks  and  bonds.  Foreign  stocks  are 
exempt  from  immediate  taxation  to  the  holders  in  many 
neighboring  States,  —  in  New  York,  Connecticut,  Rhode 
Island,  New  Hampshire  and  Vermont.  Bonds  are  treated 
differently  in  most  of  them.  Our  own  legislation  as  to  the 
taxation  of  Massachusetts  corporations  makes  a  difference 
between  stocks  and  bonds.  Our  corporations  are  taxed  on 
their  shares,  while  the  individual  holders  are  taxed  severally 
on  their  bonds.  The  methods  of  existing  legislation  within 
and  without  the  State,  therefore,  tend  to  support  the  conten- 
tion of  those  who  advocate  a  separate  treatment  of  shares. 

Nevertheless,  we  believe  there  is  no  solid  ground  for  a  dis- 
tinction. Stocks  and  bonds,  while  legally  different,  are  prac- 
tically alike  in  being  evidences  of  interest  in  some  tangible 
property.  That  tangible  property  is  taxed  somewhere ;  to 
tax  the  securities  again,  as  if  they  were  substantive  and  in- 
dependent property,  must  be  in  effect  double  taxation.  The 
same  holds  good  of  mortgage  loans  on  foreign  property.  As 
to  mortgages  on  property  in  its  own  limits,  the  State  has 
long  followed  the  policy  of  not  taxing  both  the  property 
and  the  evidence  of  interest  in  it.  Yet  the  situation  is  the 
same  as  to  mortgages  on  property  without  the  State.  That 
property  is  taxed  where  it  exists ;  if  the  evidence  of  mort- 
gage interest  in  it  is  also  taxed  where  it  is  held,  the  result  is 
again  double  taxation. 

The  truth  is  that  Massachusetts,  an  old  and  prosperous 
State,  inhabited  for  centuries  by  an  enterprising  people,  has 
accumulated  more  capital  than  she  can  advantageously  em- 
ploy in  her  own  limits.  Her  citizens  have  made  investments 
in  property  in  all  parts  of  the  Union.  These  investments, 
notwithstanding  many  mistakes  and  some  disasters,  have 
been  advantageous  alike  to  Massachusetts  and  to  her  sister 
States.  We  believe  that  it  would  be  unwise  deliberately  to 


82  TAXATION  REPORT. 

adopt  a  taxing  policy  whose  effect  would  be  to  put  a  fine  on 
such  investments.  They  should  be  neither  encouraged  nor 
discouraged  by  our  fiscal  policy.  Where  property  owned 
by  Massachusetts  citizens  is  outside  the  State,  it  should  con- 
tribute, as  in  fact  it  does,  to  the  public  burdens  of  the  com- 
munity where  it  exists,  and  where  it  enjoys  the  benefits 
of  government  activity.  Within  the  State,  those  citizens 
should  be  called  upon  to  contribute  in  some  way  to  the 
public  burdens,  not  with  respect  to  the  property  itself,  but 
with  respect  to  the  income  which  they  here  receive  and  enjoy 
from  their  foreign  investments.  But  the  property,  the  capi- 
tal, is  without  the  State,  and  does  not  share  in  the  advantage 
of  government  as  does  property  within  our  borders ;  and, 
whatever  may  happen  to  be  the  particular  kind  of  evidence 
of  ownership  which  our  citizens  may  hold,  they  should  not 
be  taxed  on  these  securities  in  the  same  manner  as  if  they 
held  property  situated  on  the  spot. 

Present  Mode  of  Taxing  Securities  is  Impracticable. 

These  arguments  may  seem  to  be  of  a  somewhat  theoretical 
nature.  But  they  are  powerfully  re-enforced  by  considera- 
tions of  a  practical  kind.  Whether  or  not  the  taxation  of 
foreign  securities,  as  now  practised  by  the  Commonwealth, 
is  in  a  large  sense  just,  it  is  certainly  impracticable.  We 
believe  it  is  impracticable  by  any  method  which  proposes  to 
tax  securities  to  the  same  extent  and  by  the  same  methods  as 
tangible  property  situated  on  the  spot.  We  believe  that  the 
proposed  system  of  rigid  enforcement  by  State  assessment 
would  not  accomplish  its  object,  and  that,  quite  apart  from 
the  desirability  of  the  end  proposed,  the  result  would  be 
fruitless  and  disappointing. 

It  must  be  remembered,  in  the  first  place,  that,  at  the  rates 
now  common  with  us,  the  taxation  of  securities  is  at  a  higher 
rate  than  has  ever  been  contemplated  in  any  civilized  coun- 
try. With  the  rate  of  interest  at  not  over  four 'and  one-half 
per  cent.,  if  indeed  so  high,  on  good  securities,  and  with  the 
tax  rate  averaging  one  and  one-half  per  cent.,  the  tax. 


STOCKS  AND  BONDS.  83 

amounts  to  one-third  of  the  income.     No  civilized  country 

has  imposed  with  success  an  income  tax  (in  ordinary  times) 

of  more  than  three  or  at  the  most  five  per  cent.     During  our 

civil  war  the  income  tax  was  for  a  while  at  ten  per  cent,  on  r 

large  incomes.     But    it   was   never   proposed   to   make   it 

heavier,  while  its  effective  collection  at  this  rate  was  difficult 

even  during  the  enthusiasm  for  the  conduct  of  the  war,  and 

impossible  under  the  conditions  of  peace.     Can  we  expect, 

then,  to  collect  honestly,  equally,  effectively,  a  tax  amounting 

to  thirty-three  and  one-third   per  cent,  on  income  derived 

from  the  most  elusive  form  of  property  ? 

Concealment  and  evasion  are  here  more  easy  than  in  any 
other  case.  The  pieces  of  paper  constituting  the  evidence 
of  ownership  can  be  tucked  away  in  deposit  vaults,  within 
or  without  the  State,  in  the  smallest  space  and  with  the 
greatest  safety.  The  temptation  to  evade  under  an  ex- 
tremely heavy  tax,  with  every  facility  at  hand,  would  un- 
failingly drive  some  to  perjury,  and  others  to  equivocations 
hardly  to  be  distinguished  from  perjury.  Not  a  few  would 
find  an  excuse  for  their  consciences  in  the  belief  that  the 
property  which  their  securities  stood  for  was  already  taxed 
heavily  elsewhere ;  while,  in  the  frequent  cases  where  the 
securities  were  yielding  no  income  whatever,  almost  any 
method  of  escaping  the  uncompensated  and  unsupported 
burden  would  seem  justified.  Much  evasion  would  be  inevi- 
table. But  nothing  prompts  even  honest  men  so  strongly  to 
evade  taxes  as  the  knowledge  that  their  neighbors  are  evad- 
ing. We  cannot  conceive  a  system  more  demoralizing  to 
the  tax  payers  than  that  for  collecting  on  securities,  by  rigid 
sworn  returns,  taxes  of  the  present  sort  at  the  present 
rate. 

Not  only  this,  but  the  object  which  the  advocates  of  the 
change  have  most  at  heart  would  be  missed.  That  object  is 
to  compel  larger  contributions  from  the  rich,  and  especially 
from  those  not  in  active  industry,  and  living  on  the  income 
from  established  and  accumulated  property.  It  is  precisely 
this  class  to  which  opportunities  for  changes  of  investment 
or  of  residence  are  most  open  ;  and  these  are  precisely  the 


84  TAXATION  REPORT. 

persons  whom  a  system  of  rigidly  taxing  securities  would  be 
least  likely  to  reach  effectively.  We  have  already  referred 
to  the  mode  in  which  the  taxes  on  real  estate  are  shifted, 
thus  leaving  for  the  investor  in  real  estate  a  net  return  at  the 
prevailing  rate  after  paying  the  taxes.  The  situation  as  to 
securities  is  obviously  different.  Their  selling  price  and  the 
rate  of  interest  they  bear  are  determined  by  the  international 
money  market,  and  holders  of  them  cannot  possibly  shift  the 
taxes  on  them  by  demanding  a  higher  rate  of  interest.  A 
person  of  large  means  can  change  his  investment  with  com- 
parative ease ;  he  can  dispose  of  one  security  and  purchase 
another;  in  the  case  here  under  discussion,  sell  his  foreign 
securities  and  invest  in  real  property  within  or  without  the 
State,  in  mortgages,  or  in  Massachusetts  stocks.  Similarly, 
a  person  of  large  means  can  change  his  domicile  most  easily, 
and,  under  pressure,  can  most  quickly  betake  himself  to  a 
jurisdiction  where  the  taxing  power  is  less  exacting.  Changes 
of  this  sort  are  comparatively  simple  to  a  millionnaire.  They 
are  more  and  more  difficult  to  carry  out  in  proportion  as  the 
tax  payer's  means  are  smaller.  Hence  the  system  of  rigid 
enforcement  of  the  present  taxes  on  foreign  securities  would 
be  most  likely  to  reach  effectively  persons  of  small  or  mod- 
erate means  and  of  honest  conscience,  and  those  persons 
only. 

We  conclude  that  while,  under  present  conditions,  the 
difficulties  of  local  assessment  by  different  towns  and  cities 
within  the  State  contribute  much  to  the  unsatisfactory  work- 
ing of  the  taxes  on  intangible  property,  this  is  not  the  root 
of  the  evil.  The  fundamental  cause  is  the  endeavor  to  tax 
securities,  which  are  no  more  than  evidences  of  ownership 
or  interest  in  property,  and  which  offer  the  easiest  means  of 
concealment  and  evasion,  by  the  same  methods  and  at  the 
same  rate  as  tangible  property  situated  on  the  spot. 

We  propose,  therefore,  a  radical  change.  We  recommend 
that  all  securities  and  all  evidences  of  debt,  representing 
ownership  or  interest  in  property  outside  the  State,  be  not 
subject  to  the  general  tax  on  property.  This  change  would 
do  away  with  all  questions  of  double  taxation,  and  with  vex- 


STOCKS  AND  BONDS.  85 

atious  and  insoluble  administrative  difficulties.  It  would 
make  the  legislation  of  the  State  on  the  various  sorts  of 
securities,  domestic  and  foreign,  consistent  with  itself.  It 
would  relieve  the  assessors  of  a  part  of  their  duties  which  is 
always  difficult  and  trying,  and  sometimes  demoralizing.  It 
would  necessitate  also  further  radical  changes,  in  the  way 
of  substitutes  for  the  present  taxes  on  intangible  personalty, 
—  a  subject  to  which  we  shall  presently  give  the  careful  con-  fj 
side  ration  it  deserves. 

It  will  doubtless  seem  to  many  quite  unjustifiable  to  pro- 
pose that  a  man  who  has  invested  in  foreign  securities  shall 
be  exempt  from  taxation,  while  his  neighbor  whose  property 
is  within  the  State  must  pay  heavy  taxes.  But  the  same 
difficulty  and  the  same  apparent  anomaly  appear  as  between 
different  parts  of  our  own  State.  An  owner  of  Boston  real 
estate  may  reside  in  a  suburb  or  in  a  distant  corner  of  the 
State.  Such  property  is  taxed  in  Boston,  where  it  is ;  the 
place  of  his  residence  has  no  concern  with  it.  Properly 
viewed,  we  believe  the  question  to  be,  not  whether  a  man's 
property  is  to  be  taxed,  but  where  and  in  what  manner  it  is 
to  be  taxed.  The  principle  that  taxes  should  be  in  propor- 
tion to  men's  means  is  not  to  be  denied,  and  we  shall  en- 
deavor to  propose  measures  that  shall  bring  it  into  effect  as 
nearly  as  the  difficulties  of  the  case  permit.  The  problem 
is,  how  to  discover  methods  which  are  not  punitive  and  of 
double  effect  in  their  mode  of  levy,  which  are  practicable 
and  smooth-working  in  their  administration,  and  which  shall 
secure  as  near  an  approach  to  justice  as  is  attainable  in  view 
of  the  complex  ownership  of  property  in  modern  times. 


A  State  Income  Tax  Inexpedient. 

The  next  question  thus  is  as  to  the  nature  of  the  substitute 
for  the  present  method  of  taxing  securities.  We  have  inti- 
mated that  complete  exemption  seems  to  be  uncalled  for. 
The  owners  of  these  securities  live  in  the  Commonwealth, 
secure  in  greater  or  less  degree  the  advantages  of  its  govern- 
ment and  of  its  public  institutions,  and  should  be  called  on 


86  TAXATION   REPORT. 

to  contribute  to  its  taxes  in  some  reasonable  proportion  to 
their  means.  The  first  and  most  obvious  principle  on  which 
to  assess  their  contributions  to  the  public  expenses  is  that 
of  payment  according  to  income.  While  the  property  which 
yields  the  income  may  be  without  the  State,  the  income  is 
received  and  enjoyed  here.  Accordingly  we  have  considered 
the  proposal  to  levy  a  State  income  tax,  at  some  uniform 
rate,  either  on  the  income  derived  from  securities  or  on 
incomes  of  all  sorts,  irrespective  of  the  source  whence  de- 
rived. 

Such  a  tax  would  be  preferable  to  the  present  system  in 
principle  and  in  its  practical  working.  In  principle,  an 
income  tax  is  said  by  nearly  all  the  writers  on  taxation  to 
be  the  most  equitable  that  can  be  devised.  It  is  peculiarly 
appropriate  where  the  property  from  which  the  income  is 
derived  is  situated  beyond  the  jurisdiction  of  the  taxing 
power.  Its  collection  certainly  could  raise  no  greater  diffi- 
culties than  does  the  present  attempt  to  collect  taxes  on  the 
capital  value  of  securities.  It  would  avoid  at  least  one  great 
hardship  of  constant  occurrence  under  the  present  system ; 
for  unlucky  investments  yielding  no  income  at  all  would  not 
be  taxed,  as  they  now  are.  Holders  of  securities  could  be 
no  more  averse  to  making  a  statement  of  income  than  of 
capital.  If  a  system  of  taxation  resting  on  declaration  of 
the  tax  payer  himself  is  to  be  retained,  we  are  of  the  opinion 
that  it  should  take  the  form  of  a  State  income  tax. 

But  the  question  still  remains  whether  an  income  tax,  even 
though  better  than  what  we  now  have,  is  likely  in  practice 
to  bring  so  great  an  improvement  as  to  justify  its  adoption. 
Unfortunately,  the  practical  difficulties  which  re-enforce  the 
theoretical  objections  to  the  present  methods  in  taxing  for- 
eign securities  appear  also  as  obstacles  to  the  income  tax. 

We  do  not  propose  to  enter  on  an  extended  discussion  of 
the  large  and  difficult  subject  of  income  taxes.  It  suffices  to 
say  that,  in  the  present  situation  of  this  country,  with  our 
political  traditions  and  business  habits,  we  are  of  the  opin- 
ion that  an  income  tax  would  prove  exceedingly  difficult  to 


STATE   INCOME   TAX.  87 

administer  with  certainty  and  with  equality  of  treatment  as 
between  different  tax  payers.  The  most  successful  income 
tax  is  that  of  Great  Britain.  But  this  is  collected  almost 
exclusively  at  the  source  ;  by  taxation  of  corporations  at  the 
source,  by  deduction  in  advance  of  payments  of  interest,  of 
rents  and  of  salaries.  The  Chancellor  of  the  Exchequer  has 
recently  stated  that  three-quarters  of  the  British  income  tax 
is  collected  by  an  automatic  process,  without  question  or  de- 
mand of  the  individual  tax  payers.  The  same  remark  could 
be  made  of  the  existing  Massachusetts  corporation  tax.  But, 
from  the  nature  of  the  case,  no  such  fortunate  outcome  could 
be  expected  from  a  tax  on  incomes  derived  from  sources 
beyond  our  jurisdiction.  Here  the  only  possible  method  is 
that  of  declaration  by  the  individual  tax  payer,  with  all  its 
possibilities  of  concealment,  equivocation,  false  statement, 
full  payment  by  the  honest,  evasion  by  the  dishonest,  and 
constant  temptation  for  evasion  and  false  statement  for  that 
large  class  of  men  neither  conspicuously  honest  nor  wilfully 
dishonest.  The  experience  of  the  United  States  with  the 
income  tax  levied  in  the  civil  war  and  continued  for  a  while 
after  its  close,  is  fresh  in  the  memories  of  many  of  our  citi- 
zens, and  does  not  encourage  us  to  hope  for  certainty,  equity, 
or  honesty  in  the  administration  of  a  State  income  tax.  The 
recent  attempt  to  revive  the  United  States  income  tax,  under 
circumstances  of  acrimonious  partisan  debate,  has  caused 
this  method  of  taxation  to  be  regarded  with  new  disfavor  by 
a  great  mass  of  our  citizens,  and  has  thus  deprived  it  of  one 
important  support,  desirable  for  all  taxes  and  especially 
desirable  for  taxes  resting  on  a  personal  declaration,  — 
namely,  a  general  conviction  in  the  community  that  the 
tax  is  commendable  and  fair.  We  fear  that  no  effective 
public  opinion  would  be  present  to  aid  the  administration 
of  a  State  income  tax,  and  that  evasion  and  concealment 
would  take  place  to  so  great  an  extent  as  to  render  it  in- 
effective and  deservedly  unpopular. 


88  TAXATION  REPORT. 

The  Pennsylvania  Method. 

A  system  which  is,  in  its  effects,  not  very  far  from  a  State 
income  tax  on  securities,  is  now  in  operation  in  the  State 
of  Pennsylvania.  There  the  capital  stock  of  corporations 
chartered  by  the  State  and  doing  business  in  the  State  is 
taxed  at  the  source, — to  the  corporation,  and  not  to  the 
holder.*  But  as  to  foreign  stocks  and  in  general  as  to  securi- 
ties and  investments  of  the  kind  which  we  now  have  under 
consideration,  a  compromise  policy  is  followed.  Pennsyl- 
vania taxes  such  investments  at  a  uniform  moderate  rate,  — 
four  mills  on  each  dollar  of  value,  i.e.,  $4  on  each  $1,000 
of  value.  This  rate,  it  will  be  noted,  is  slightly  lower  than 
that  of  the  Massachusetts  savings  bank  tax.  On  invest- 
ments bearing  four  per  cent,  interest  and  selling  at  par,  it 
amounts  to  a  tax  of  ten  per  cent,  on  the  income.  The  tax, 
however,  is  assessed  on  the  market  value  of  securities. 
Market  value  is  of  course  determined  in  most  cases  mainly 
by  the  interest  accruing  from  the  securities,  but  it  is  affected 
by  all  the  contingencies  of  the  market.  Securities  yielding 
no  income  at  all  are  still  taxed  at  the  uniform  four-mill  rate, 
on  whatever  market  value  they  may  have.  This  method 
of  taxation  is  applied  to  all  mortgages,  all  debts  due  from 
solvent  debtors,  all  accounts  bearing  interest,  all  shares  and 
bonds,  and  in  general  to  securities  and  loans  not  otherwise 
provided  for  in  the  tax  laws ;  the  important  exceptions  being 
as  to  shares  in  corporations  taxed  directly  by  the  State  on 
capital  stock,  loans  of  the  United  States  or  of  the  State  of 
Pennsylvania,  and  notes  discounted  by  banks. 

The  Pennsylvania  tax  is  assessed  and  collected,  like  the 
taxes  on  intangible  personalty  in  Massachusetts,  by  the  local 

*  The  rate  of  the  Pennsylvania  State  corporation  tax  is  five  mills  on  the  dollar 
(i.e  ,  $5  on  $1,000)  on  the  market  value  of  the  shares  of  all  corporations  chartered 
by  the  State  or  doing  business  in  the  State,  with  the  exception  of  manufacturing 
corporations.  la  addition,  the  real  estate  and  tangible  personal  property  of  such 
corporations  are  taxable  locally.  This  system,  it  is  clear,  differs  in  important  re- 
spects from  the  Massachusetts  tax  on  corporations. 


THE  PENNSYLVANIA  METHOD.  89 


tax  officials.  The  proceeds  are  turned  over  to  the  State 
treasury.  One-quarter  of  the  amount  the  State  retains  for 
its  own  use ;  the  remaining  three-quarters  are  handed  back 
to  the  counties  or  other  local  bodies  where  the  taxes  have 
been  levied.  The  revenue  derived  from  this  source  is  a  sub- 
stantial one,  as  the  appended  figures  show.* 

The  method  seems  to  us  clearly  better  than  that  now  in 
use  in  this  Commonwealth.  A  similar  method  has  been 
suggested  for  adoption  here :  a  uniform  State  tax,  say  at 
the  savings  bank  rate,  on  securities  of  all  sorts  not  taxed 
at  the  source.  But  we  gather,  from  such  inquiry  as  we  have 
been  able  to  make,  that  the  Pennsylvania  method  is  not 
satisfactory  in  its  practical  working.  In  that  State,  as  in 
Massachusetts,  though  the  law  contemplates  a  statement 
under  oath  by  the  tax  payer,  in  practice  statements  are  rare, 
and  taxation  usually  proceeds  by  doomage.  In  the  absence 
of  statements,  the  tax  on  personal  property  seems  to  be  as 
uncertain,  irregular,  and  unsatisfactory  as  the  Massachusetts 
tax  on  intangible  personalty.  It  is  not  supposed,  at  the 
best,  that  more  than  half  the  securities  in  Pennsylvania  are 
reached ;  and  the  state  of  opinion  among  the  tax  payers  in 
Pennsylvania  on  this  tax  seems  to  be  very  like  that  of  Mas- 
sachusetts tax  payers  on  the  taxation  of  similar  property. 
A  large  part  of  the  revenue  yielded  by  the  tax  in  Pennsyl- 
vania would  appear  to  come  from  savings  banks.  The  loans 
of  these  institutions  arc  reached  by  this  tax  only ;  and, 
while  no  separate  figures  are  published  to  indicate  what  part 
of  the  revenue  is  contributed  by  them,  it  may  be  inferred 
that  it  is  a  very  substantial  part.  On  the  whole,  we  are  of 
the  opinion  that  this  method  offers  no  advantages  over  that 
of  a  State  income  tax.  To  be  effective  and  equal  in  opera- 
tion, it  must  rest  on  declaration  or  statement,  actually 

*  Receipts  from  Pennsylvania  State  Tax  on  Securities. 


1886 $674,624  14 

1887 864,355  36 

1888 1,014,823  20 

1889 747,871  32 

1890 •  .  923,938  94 


1891,  .    .    ...    .  $1,906,244  67 

1892 2,235,838  46 

1893 3,502,476  69 

1894, 2,386,750  99 

1895, 2,307,936  32 


90  TAXATION  REPORT. 

required  from  the  tax  payer;  thus  bringing  the  obvious 
dangers  of  equivocation,  of  falsehood,  of  exaction  from  the 
conscientious  and  escape  for  the  unconscientious.  If  a  sys- 
tem of  taxation  resting  on  stringently  required  declaration 
see  page  86.  {s  to  be  adopted,  it  should  take  the  form,  as  we  have  already 
said,  of  a  tax  on  incomes,  not  on  capital  or  on  market 
value. 

Trie  Connecticut  Method. 

A  different  system  still,  and  one  deserving  consideration, 
is  that  of  the  neighboring  State  of  Connecticut.  There,  as 
in  Pennsylvania,  the  system  of  the  general  property  tax 
has  been  departed  from,  so  far  as  securities  are  concerned. 
Shares  in  foreign  corporations  are  virtually  exempt.*  Bonds 
of  foreign  and  domestic  corporations,  and  notes  and  choses 
in  action  in  general,  are  subject,  at  the  option  of  the  holder, 
to  a  uniform  State  tax.  This  arrangement  does  not  apply 
to  bonds  of  Connecticut  railways,  which  are  taxed  to  the 
railway  and  not  to  the  holder ;  nor  does  it  apply  to  mort- 
gage loans  secured  by  real  property  within  the  State,  which 
are  treated  in  Connecticut  substantially  in  the  same  manner 
as  in  Massachusetts.  But  as  far  as  bonds  and  notes  are 
concerned,  the  holder  may  register  them  with  the  State 
treasurer  or  with  such  person  as  the  treasurer  may  designate, 
and  pay  on  them  a  tax  at  the  rate  of  $2  annually  for  each 
$1,000  of  the  face  value.  The  security  is  then  exempt  from 
all  other  taxation.  On  a  bond  of  $1,000,  paying  $40  per 
annum,  this  tax  is  equivalent  to  one  of  five  per  cent,  on  the 
income. 

If  the  securities  are  not  registered,  they  are  liable  to  tax- 
ation (if  discovered  by  the  assessors)  as  personal  property 
at  the  local  rates,  as  they  are  in  Massachusetts.  From  this 

*  Under  the  letter  of  the  statute,  they  are  taxable,  unless  the  shares,  or  what 
they  represent,  are  taxed  in  the  foreign  State,  to  the  same  extent  as  other  like  prop- 
erty owned  by  citizens.  In  the  latter  case  they  are  not  taxable  in  Connecticut. 
The  courts  have  held  that  such  stock  may  be  regarded  as  prima  facie  taxed  in  the 
foreign  State.  To  tax  it,  the  assessors  have  to  prove  that  it  is  not  taxed  elsewhere ; 
consequently  all  such  stock  is  virtually  exempt. 


THE   CONNECTICUT  METHOD.  91 

tax  the  State  of  Connecticut  derives  a  moderate  revenue,  as 
appears  from  the  figures  given  below.* 

This  method  has  some  advantages.  It  endeavors  to  per- 
suade the  holder  of  securities  to  register  them  for  taxation  at 
a  moderate  rate  of  tax,  with  the  heavy  local  tax  hanging  over 
him  in  terrorem  if  he  fails  to  register.  Its  efficacy  evidently 
depends  largely  on  the  pressure  which  the  local  authorities 
may  succeed  in  bringing  to  bear.  We  are  informed  that  its 
working  is  not  entirely  satisfactory  ;  a  large  number  of  secu- 
rities are  reached  neither  by  local  assessment  nor  by  regis- 
tration. The  statutes  of  Connecticut  provide  that  owners 
of  real  estate  must  send  in  a  sworn  return  of  all  their  prop- 
erty, under  penalty  of  an  addition  of  ten  per  cent,  to  the 
assessors'  taxes  on  their  real  estate.  Hence  the  owners  of 
real  estate  usually  make  a  return  and  register  their  bonds. 
But  persons  holding  no  real  estate,  and  owning  only  intan- 
gible and  untraceable  securities,  seldom  make  sworn  state- 
ments and  seldom  register  their  bonds,  the  local  assessors 
not  dooming  them  so  heavily  as  to  induce  them  to  do  so. 
The  State  registration  tax  thus  affects  some  holders  more 
than  others,  and  is  far  from  equal  or  entirely  satisfactory  in 
its  operation. 

The  proposals  which  we  have  discussed  so  far  all  rest  on 
some  form  of  sworn  statement  or  declaration  by  the  tax 
payer.  That  is,  they  all  make  the  amount  of  tax  depend  on 
the  tax  payer's  own  avowal  of  his  means  or  income,  and 
thus  all,  in  greater  or  less  degree,  give  opportunities  for 
evasion,  and  put  some  premium  on  untruthfulness.  The 
question  which  has  received  our  careful  attention  is  as  to  the 

*  Receipts  from  the  Connecticut  State  Tax  on  Securities. 


1890 $129,452  06 

1891 80,524  47 

1892 108,433  95 


1893 $33,991  48 

1894,   ......   56,003  88 

1895 56,861  83 


From  the  manner  in  which  the  tax  is  collected,  the  receipts  are  likely  to  vary 
much  from  year  to  year.  The  securities  may  be  registered  for  any  number  of  years, 
and  thereupon  the  tax  becomes  payable  not  for  the  current  year  alone  but  for  the 
whole  period.  This  will  explain  the  large  receipts  during  the  first  three  years  of  its 
operation  (introduced  in  1889) . 


92  TAXATION  REPORT. 

possibility  of  methods  of  taxation  which,  while  not  calling 
for  a  declaration,  shall  yet  bring  a  substantial  revenue  from 
property  which  should  yield  further  contributions  to  the 
public  burdens.  Two  modes  of  accomplishing  this  object 
have  seemed  to  us  feasible,  and  accordingly  are  now  recom- 
mended for  adoption  by  the  Legislature.  One  of  these  is  a 
Tax?eaebitalie°n  *ax  on  inheritances  and  successions ;  the  other  is  a  tax  on 
presumable  or  estimated  income,  as  indicated  by  expendi- 
ture for  dwelling  accommodation. 

An  Inheritance  Tax. 

A  tax  on  inheritances  and  successions  has  the  great  ad- 
vantage of  using  administrative  machinery  already  in  exist- 
ence. The  probate  courts  already  supervise  the  estates 
passing  on  death.  Some  examination  of  the  property  takes 
place  in  any  event.  By  making  that  examination  some- 
what more  careful  and  stringent,  an  effective  collection  of 
.  the  tax  can  be  secured.  No  declaration  is  required  from  any 
one  except  the  executor  or  administrator,  who  is  already 
accountable  to  the  court. 

It  has  been  suggested  that  an  inheritance  tax  can  be  evaded. 
Doubtless  there  are  possibilities  of  evasion.  The  opportu- 
nities for  evasion  where  a  man's  property  is  in  the  form  of 
securities  are  always  great.  They  are  much  greater,  we 
may  remark  in  passing,  under  the  existing  methods  of  tax- 
ing personal  property  than  they  would  be  under  an  inheri- 
tance tax.  But  in  the  overwhelming  majority  of  cases  the 
property  passing  at  death  is  more  or  less  complex,  being 
partly  realty  and  partly  personalty,  partly  fettered  by  debts 
and  partly  free.  Its  final  distribution  among  the  heirs  and 
legatees  compels  some  degree  of  publicity,  and  makes  it  pos- 
sible, through  the  probate  courts,  to  secure  a  full  disclosure 
of  the  estate.  No  doubt,  with  an  unduly  heavy  tax,  and 
with  a  general  feeling  of  opposition  to  this  method  of  taxa- 
tion, there  would  be  greater  probability  that  the  ingenuity 
of  lawyers  and  testators  would  be  directed  to  evasion.  But 
we  propose  a  moderate  tax,  the  rate  being  in  general  five 


INHERITANCE  TAX.  93 

per  cent.  We  believe  that  the  community  is  prepared  for 
this  form  of  taxation  and  that  public  opinion  will  approve 
it,  —  a  powerful  factor  in  aid  of  its  efficient  collection. 
Hence,  notwithstanding  a  possibility  of  some  evasion,  we 
are  confident  that  an  inheritance  tax  can  be  satisfactorily 
administered  and  collected. 

The  burden  of  such  a  tax  is  in  most  cases  borne  with  com- 
parative ease.  Where  property  passes  on  death,  the  recipient 
usually  is  better  off.  If,  before  the  new  possessions  reach 
him,  and  in  the  course  of  settlement  through  the  probate 
court,  the  State  takes  off  a  modest  slice,  he  accepts  the  de- 
duction philosophically.  He  submits  to  it  much  more  will- 
ingly than  he  would  if  the  State  were  to  levy  five  per  cent, 
on  his  property  after  he  had  received  it  and  had  come  to  think 
of  it  as  all  his  own. 

The  only  cases  where  such  a  tax  would  work  hardship  and 
would  be  felt  to  be  severely  exacting  are  those  where  the 
bread-winner  dies,  and  the  widow,  minor  children,  and  other 
dependents  are  left  with  a  slender  and  diminished  income 
from  the  property  of  the  deceased.  We  propose  to  provide 
for  such  cases  by  an  appropriate  system  of  exemption  and 
abatement.  We  propose  that  there  shall  be  a  general  ex- 
emption of  estates  of  $10,000  and  less  when  passing  to  near 
relatives.  We  propose  also  that  estates  between  $10,000 
and  $25,000  shall  be  taxable  only  on  the  excess  over  $5,000. 
In  this  way  small  estates  will  be  entirely  exempted,  and 
estates  of  moderate  size  above  the  exempted  limit  will  still 
have  a  considerable  abatement. 

Beyond  the  exemptions  and  abatements  for  small  estates, 
we  propose  a  uniform  rate  of  taxation  on  all  estates.  The 
question  of  progression  has  been  considered  by  us,  but  we 
do  not  recommend  any  graduated  scale.  Such  a  scale  would 
raise  very  difficult  questions  of  principle,  as  to  the  propriety 
of  discrimination  between  persons  of  large  and  small  means, 
and  as  to  the  extent  to  which  the  State  should  go  in  a  method 
which  tends  to  discourage  accumulation.  In  any  case,  it  is 
doubtful  whether  a  graduated  tax  on  inheritances  would  be 
in  accord  with  the  Constitution  of  the  Commonwealth.  This 


94  TAXATION  KEPORT. 

form  of  taxation,  moreover,  is  new  and  untried  in  this  State, 
and  we  believe  it  should  be  adopted  with  provisions  as 
simple  as  possible,  and  as  little  open  to  extraneous  objection. 
In  view  both  of  the  novelty  of  the  method  and  of  the  consti- 
tutional difficulties,  we  recommend,  subject  to  the  abate- 
ments and  exemptions  just  stated,  a  uniform  proportional 
tax  on  all  estates. 

In  order  to  bring  about  true  uniformity,  however,  and  to 
secure  the  full  effects  of  this  method  of  taxation,  we  recom- 
mend that  it  shall  apply  —  subject  to  certain  qualifications 
presently  to  be  stated  —  to  real  estate  as  well  as  to  personal 
estate.  The  States  of  California,  Connecticut,  Illinois, 
Maine,  Maryland,  New  Jersey,  New  York,  Ohio,  Pennsyl- 
vania, each  of  which  has  what  is  commonly  called  a  collateral 
inheritance  act,  all  tax  real  estate,  and  such  is  the  provision 
of  our  existing  act.  The  New  York  act  alone  makes  a  dis- 
tinction between  real  and  personal  estate,  but  this  is  for  the 
purpose  of  imposing  a  tax  upon  personal  property  passing 
to  certain  near  relations.  We  believe  that  the  extension 
of  the  inheritance  tax  to  real  estate,  if  the  tax  is  properly 
guarded  and  carefully  administered,  is  justified  by  the  con- 
ditions under  which  real  estate  is  commonly  owned  and 
managed,  and  is  called  for  by  the  financial  needs  of  the 
State. 

see  page  32.  The  main  grounds  on  which  this  recommendation  rests 
have  already  been  stated  in  that  part  of  our  report  in  which 
the  working  of  the  present  system  on  real  estate  is  discussed. 
We  have  tried  to  show  that,  while  real  estate  is  now  heavily 
taxed,  those  taxes  are  largely  shifted  by  the  owners.  The 
owners  advance  the  taxes,  but  they  reckon  them  among  the 
expenses  of  management  in  real  estate  investments  ;  and  they 
secure  from  the  rentals  a  net  return  at  the  usual  rate  on  their 
investments.  Hence  the  owners  may  fairly  be  called  on  to 
contribute  further  to  the  public  burdens,  and  cannot  be 
excused  on  the  ground  that  they  have  already  contributed 
enough.  They  have  contributed  in  form  only,  not  really 
and  definitively.  An  inheritance  tax  on  realty,  affecting  as 
it  will  only  a  fraction  of  the  realty  offered  for  sale  or  for 


INHERITANCE   TAX.  95 

rental  at  any  one  time,  cannot  be  shifted  by  charging  it  off 
in  higher  rents.  It  causes  a  real  contribution  to  the  public 
burdens  from  those  whose  investments  are  in  real  estate. 

We  think  the  extension  of  the  inheritance  tax  to  realty 
especially  desirable,  because  it  brings  about  substantial  tax- 
ation on  the  well-to-do  and  the  rich,  and  so  secures  a  better 
distribution  of  the  burden  of  taxation.  Whatever  may  hap- 
pen to  be  the  investments  and  possessions  of  a  person  of 
means,  he  should  contribute  in  proportion  to  his  means  to 
the  public  charges.  To  bring  this  about  with  the  least  pos- 
sibility of  evasion,  without  a  shifting  of  taxes  to  the  shoulders 
of  others,  without  annoying  and  objectionable  inquisition  into 
the  private  affairs  of  citizens,  is  the  most  difficult  problem  in 
taxation.  A  good  step  toward  its  satisfactory  solution  is  in  an 
inheritance  tax  applied  to  all  persons  of  means,  and  applied 
to  their  means  whatever  shape  these  happen  to  have. 

We  should  be  much  averse  to  an  extension  of  the  inheri- 
tance tax  to  realty  in  such  a  manner  as  to  increase  the  weight 
of  taxation  on  land  in  the  already  overburdened  farming 
towns  of  the  State.  But  we  believe  that  the  general  exemp- 
tions we  have  already  proposed  will  prevent  any  hardship 
in  this  direction.  Estates  up  to  $10,000  passing  to  near 
relatives  are  exempt,  and  estates  over  that  amount  up  to 
$25,000  are  taxable  only  on  the  excess  over  $5,000.  Almost 
without  exception,  farms  would  come  within  the  $10,000 
limit ;  and  the  cases  where  farms  above  that  limit  could  be 
subject  under  these  provisions  to  disproportionately  heavy 
taxes  must  be  very  rare  indeed. 

One  other  important  provision  we  recommend  in  regard  to 
the  inheritance  tax  on  real  estate.  It  is  that  this  part  of  the 
tax  be  payable,  at  the  option  of  the  person  liable,  either  at 
once  in  a  lump,  or  by  instalments  spread  over  a  series  of 
years.  The  grounds  for  this  proposal  are  easily  seen.  Per- 
sonal property  can  be  readily  divided.  A  part  can  be  sold 
to  pay  the  tax  with  comparative  ease.  Real  estate  cannot  be 
readily  divided,  and  the  sale  of  the  whole  or  of  a  part  must 
often  be  slow.  To  call  at  once  and  unconditionally  for  a 
payment  of  five  per  cent,  on  the  appraised  value  of  real 


96  TAXATION  REPORT. 

estate  passing  at  death  would  often  cause  inconvenience  and 
sometimes  hardship.  We  propose,  therefore,  that  the  tax 
may  be  paid  by  instalments  of  one  per  cent,  a  year  for  five 
years,  the  tax  remaining  a  lien  on  the  property  until  the  last 
instalment  is  paid. 

A  draft  of  a  bill  which  expresses  in  legal  form  the  prin- 
ciples already  indicated  is  submitted  as  a  part  of  our  report. 
It  is  designed  to  secure  the  assessment  and  collection  of  the 
tax  as  directly  and  with  as  little  friction  as  may  be,  and  to 
prevent  evasions,  so  far  as  that  may  be  done  without  unduly 
vexatious  restrictions. 

The  English  law  guards  with  much  greater  care  and  in 
greater  detail  against  evasions.  Experience  may  prove  that 
other  safeguards  than  those  provided  by  the  bill  will  be 
needed  here.  If  so,  they  can  be  enacted  as  experience  dem- 
onstrates their  necessity.  We  have  not  thought  it  expedi- 
ent to  provide  for  the  postponement  of  the  payment  of  the 
tax  on  defeasible  estates  and  otber  contingent  estates  until 
the  persons  beneficially  entitled  to  the  successive  interests 
come  into  the  beneficial  enjoyment  of  them.  This  is  done  by 
the  English  law,  and  an  attempt  has  been  made  in  one  or  two 
States  to  do  so ;  but  it  is  too  early  to  judge  of  the  effect  in 
this  country  of  such  provisions.  They  make  the  law  exceed- 
ingly complicated,  doubtful  of  interpretation,  difficult  to 
administer,  and  would  cause  delay  and  loss  in  the  collection 
of  the  tax.  The  number  of  such  estates  is  comparatively 
small,  and  the  payment  of  the  tax  on  the  whole  value  of  the 
estate  out  of  the  estate  itself  will  cause  no  injustice,  since 
testators  may  be  expected  to  provide  for  such  contingency 
in  drafting  their  wills.  For  the  single  case  in  which  the  law 
must  take  notice  of  successive  interests  in  the  same  prop- 
erty, namely,  that  of  a  legacy  exempt  from  taxation  because 
of  relationship,  with  a  remainder  or  reversion  in  the  same 
property  which  is  taxable,  provision  is  made  for  the  pay- 
ment of  the  tax  by  the  person  entitled  to  the  taxable  in- 
terest. 

We  have  limited  the  number  of  exemptions  from  this  tax  to 
a  few  persons.  While  a  wider  door  to  exemptions  might  be 


INHERITANCE   TAX.  97 

opened  if  this  tax  were  merely  an  addition  to  burdens  already 
existing,  and  no  relief  were  offered  from  other  methods  of 
taxation,  we  are  of  opinion  that  as  a  substitute  for  them  as  For  the  other 

substitute  pro- 

this  is,  in  part,  no  other  exemption  should  be  made.  Only  posed  see 
the  persons  exempted  can  be  said  to  have  a  moral  claim  on  the 
bounty  of  the  testator  or  upon  the  estate  of  one  deceased. 
To  others,  whether  individuals,  or  public,  charitable  or  edu- 
cational institutions,  a  legacy  is  a  gratuity ;  the  payment 
of  the  tax  would  be  little  felt  by  them,  and  it  seems  best  that 
it  should  be  paid. 

Since  the  probate  courts  are  charged  with  the  duty  of  the 
supervision  of  the  settlement  of  estates  of  deceased  persons, 
they  afford  the  most  convenient  and  efficient  machinery  for 
the  administration  of  this  law.  This  is  so  clear  that  all  the 
States,  some  twelve  in  all,  who  have  enacted  laws  levying 
taxes  on  successions  and  legacies  have  imposed  on  such 
courts  the  administration  of  such  laws.  Our  existing  col- 
lateral inheritance  tax  law  does  the  same.  In  the  bill  which 
we  submit  the  same  course  is  pursued.  Such  duty  will 
impose  additional  labor  on  these  courts,  and  will  doubtless 
render  additional  clerical  force  necessary  in  some  counties. 
These  courts  are  to  decide  all  questions  relative  to  the  tax, 
even  to  determining  its  amount.  The  Treasurer  of  the  Com- 
monwealth is  charged  with  the  duty  of  collection.  We  find 
that  this  is  a  common  provision  in  the  laws  of  other  States, 
and  we  are  unable  to  discover  any  better  machinery  for  col- 
lection than  will  be  afforded  by  a  well-regulated  department 
in  the  Treasurer's  office.  We  have  attempted  to  provide 
against  double  taxation  in  this  form,  as  will  be  seen  by  an 
inspection  of  the  bill ;  and  among  other  provisions  will  be 
found  such  as  relate  to  correction  of  errors  and  repayment 
of  tax  erroneously  paid. 

For  a  better  knowledge  of  the  general  scope  and  other  seeAPPendix 
details  of  the  bill  we  refer  to  the  bill  itself,  to  which  we 
earnestly  invite  the  attention  of  the  General  Court. 


98  TAXATION  REPORT. 


Expected  Revenue  from  the  Inheritance  Tax. 

The  question  has  inevitably  arisen  as  to  the  amount  of 
revenue  which  may  fairly  be  expected  from  the  inheritance 
tax.  We  have  given  this  question  our  careful  attention,  but 
unfortunately  it  is  impossible  to  do  more  than  make  a  very 
rough  estimate  as  to  the  yield  of  the  tax. 

The  most  important  information  available  as  to  the  amount 
of  property  passing  annually  at  death  is  found  in  a  valuable 
report  made  by  the  Bureau  of  Statistics  of  Labor  for  1894 
(twenty-fifth  annual  report,  pages  49-304).  The  Bureau 
investigated  the  amounts  of  property  inventoried  on  the 
records  of  the  probate  courts  at  four  periods,  1829-31, 1859- 
61,  1879-81  and  1889-91.  The  last  of  these  periods,  cover- 
ing three  years,  1889,  1890  and  1891,  is  near  enough  to  give 
us  available  information  as  to  present  conditions. 

It  appears  that  in  these  three  years  (1889-91)  the  amount 
of  property  shown  by  inventory  in  the  probate  courts  (both 
personal  and  real)  was  $155,558,788.  Of  this  amount, 
$60,190,946  was  real  property  and  $95,367,842  was  per- 
sonal property.  Of  the  total  amount,  $30,621,622  would 
have  been  exempt  if  estates  not  exceeding  $10,000  had  been 
free  from  inheritance  tax.  A  further  deduction  of  $7,490,000 
would  need  to  be  made  for  the  abatement  of  $5,000  from  es- 
tates exceeding  $10,000  but  not  exceeding  $25,000.  Allow- 
ing for  these  two  deductions,  we  should  have  the  sum  of 
$117,447,166  subject  to  tax  for  these  three  years. 

These  figures,  however,  are  of  the  inventoried  estates  only. 
In  many  cases  the  law  as  it  stands  at  present  does  not  effec- 
tively require  an  inventory.  It  appears  that  inventories  were 
on  record  for  only  57.97  per  cent,  of  the  estates  probated; 
for  42.03  per  cent,  of  the  estates  there  was  no  inventory. 
Thus  we  have  no  figures  as  to  more  than  two-fifths  of  the 
probated  estates.  There  is  no  satisfactory  evidence  to  show 
whether  the  estates  not  inventoried  were  of  the  same  general 
character  as  those  inventoried.  We  have  made  inquiries  on 
this  point  from  the  Register  of  Probate  and  from  other  per- 


INHERITANCE  TAX  REVENUE.  99 

sons  who  have  had  occasion  to  examine  and  compare  the 
probate  records.  We  find  that  it  is  common  to  hand  in  no 
inventory  as  to  very  small  estates,  but  also  that  there  is  no 
inventory  as  to  a  good  proportion  of  large  estates.  On  the 
whole,  we  have  concluded  that  the  estates  not  inventoried 
were  on  the  average  no  smaller,  and  probably  were  larger, 
than  those  inventoried.  On  the  assumption  that  the  aver- 
age size  of  estates  for  the  two  classes  was  the  same,  we 
should  find  that  the  total  amount  probated  would  have  been 
$268,343,605.  If  the  proportion  of  estates  of  under  $10,000 
and  between  $10,000  and  $25,000  were  the  same  in  the  two 
classes,  we  should  find  —  making  the  same  allowances  as  in 
the  case  of  inventoried  estates  —  an  amount  of  $202,599,906 
subject  to  tax  for  the  three  years. 

These  figures  are  for  the  three  years.  Under  a  simple 
exemption  of  estates  of  $10,000,  the  annual  estimated  amount 
subject  to  tax  would  be  $71,840,128.  With  an  abatement 
of  $5,000  on  estates  between  $10,000  and  $25,000  (the  total 
exemption  of  estates  of  $10,000  still  continuing),  we  should 
estimate  the  amount  of  property  annually  subject  to  tax  to 
be  $67,533,302.  Five  per  cent,  on  this  would  yield  an 
annual  revenue  of  $3,376,665. 

Unfortunately,  there  is  still  another  element  of  uncertainty 
which  qualifies  further  even  these  doubtful  estimates  and  ap- 
proximations. This  is  the  fact  that  it  is  impossible  to  say 
how  far  the  figures  in  the  inventories  of  estates  refer  to  the 
gross  assets,  how  far  to  net  assets,  after  deducting  debts  due 
by  the  testator. 

An  inheritance  tax  could  be  reasonably  applied  only  to  net 
estates.  The  inventories  filed  with  the  probate  courts,  and 
used  by  the  Bureau  of  Statistics  of  Labor,  usually  refer  to 
gross  assets.  They  often  make  allowance  for  mortgage 
debts  on  real  estate,  and  hence  give  the  net  value  of  the  real 
property  passing  at  death.  Occasionally  they  make  allow- 
ance for  personal  property  in  the  form  of  securities  owned 
by  an  estate  and  pledged  as  collateral  for  loans,  but  this  is 
not  common.  Ordinarily  they  state  the  gross  value  of  the 
personalty,  making  no  allowances  for  debts.  Hence  the 


100  TAXATION   REPORT. 

estates  taxable  under  an  inheritance  tax  would  not  be  so  great 
as  those  inventoried  now.  How  great  an  allowance  should 
be  made  for  debts,  and  how  this  allowance  should  be  applied 
to  the  estates  inventoried  and  not  inventoried,  it  is  impossi- 
ble to  say. 

On  the  whole,  we  are  disposed  to  believe  that  an  inheri- 
tance tax  of  five  per  cent,  on  realty  and  personalty,  with  an 
exemption  of  estates  under  $10,000  and  with  the  other  ex- 
emptions and  abatements  we  have  described,  would  yield  to 
the  Commonwealth  a  sum  not  less  than  $2,500,000  annually. 
This  is  no  more  than  an  estimate,  resting  on  the  uncertain 
data  which  we  have  analyzed.  It  is  submitted  to  the  General 
Court  as  the  only  statement  in  figures  which  it  is  now  possible 
to  make.  The  financial  result  of  this  tax  must  await  trial, 
and  trial  through  several  years. 

Distribution  of  Revenue  from  the  Inheritance  Tax. 

It  remains  to  consider  what  disposal  can  best  be  made  of 
the  proceeds  of  a  tax  on  legacies  and  successions.  This 
revenue  must  be,  from  the  nature  of  the  case,  State  revenue 
and  not  local  revenue.  Received  by  the  State  treasury,  it 
might  be  used  simply  to  meet  current  State  expenditures, 
thus  doing  away  with  any  need  of  a  direct  tax  on  property 
on  behalf  of  the  State.  But  we  believe  it  to  be  more  ex- 
pedient on  every  account  to  use  the  proceeds  in  a  different 
way,  — to  distribute  them  among  the  several  cities  and  towns 
of  the  State,  in  such  manner  as  to  prevent  financial  embar- 
rassment from  the  other  changes  recommended  by  us,  and 
to  secure  also  a  better  adjustment  of  the  general  burden  of 
taxation  in  the  various  parts  of  the  Commonwealth. 

The  inheritance  tax  is  proposed  by  us  as  the  main  substi- 
tute for  the  present  taxes  on  intangible  personalty.  While 
its  yield  is  not  easily  estimated,  we  are  of  the  opinion  that 
it  will  be  not  very  far  from  that  now  secured  from  the  taxes 
for  which  it  is  a  substitute.  We  recommend  that  the  pro- 
ceeds be  divided  among  the  cities  and  towns,  furnishing 
them  a  revenue  in  place  of  that  now  obtained  from  the  tax- 


DISTRIBUTION   OF   REVENUE.  101 

ation  of  securities,  income,  and  intangible  personalty  in 
general. 

A  difficult  and  important  problem  is  that  of  the  basis  of 
distribution.  Various  methods  have  been  considered  by 
us.  Population,  school  attendance,  assessed  valuation,  or  a 
combination  of  several  of  these,  might  be  used.  We  have 
concluded  that  the  best  plan,  all  things  considered,  is  to  dis- 
tribute the  revenue  one-half  on  the  basis  of  population,  one- 
half  on  that  of  assessed  valuation. 

Distribution  by  population  and  by  school  attendance  come 
practically  to  the  same  thing.  Either  would  cause  a  heavy 
gain  to  most  of  the  smaller  towns  and  to  the  manufactur- 
ing cities,  and  a  heavy  loss  to  Boston  and  other  residential 
cities  ;  that  is,  the  former  would  gain  much  more  from  their 
share  of  the  inheritance  tax  than  their  present  revenue  from 
intangible  personalty  comes  to,  while  the  latter  would  gain 
much  less  than  they  now  secure  from  that  source.  Distribu- 
tion on  the  basis  of  assessed  valuation  would  be  much  more 
favorable  to  Boston  and  the  residential  cities,  and  much  less 
favorable  to  the  smaller  towns.  It  is  evident  that  distribu- 
tion on  this  basis  (valuation)  would  amount  practically  to 
the  same  thins:  as  a  remission  of  direct  State  taxes  of  the 

o 

same  amount,  since  the  State  taxes  are  levied  on  the  several 
towns  and  cities  in  proportion  to  their  assessed  valuation. 
On  any  basis,  those  few  towns  would  lose  in  which,  because 
of  their  attractiveness  for  persons  of  means,  there  is  now  an 
exceptional  concentration  of  intangible  personalty. 

We  have  finally  concluded  to  recommend  distribution  on 
a  combination  of  the  two  main  principles,  —  one-half  on  the 
basis  of  population  and  one-half  on  that  of  assessed  valua- 
tion,—  because  there  would  thus  ensue  a  substantial  relief 
to  the  towns  and  cities  which  are  now  overburdened  by  taxa- 
tion, and  yet  not  too  heavy  a  loss  to  Boston  and  other  cities 
in  similar  circumstances.  One  of  the  important  objects  to 
be  secured  in  any  reform  of  the  tax  laws  is  some  substantial 
relief  to  the  farming  towns,  and  to  those  cities  and  towns  in 
which  most  of  the  residents  are  of  small  or  moderate  means. 
While  complete  equality  in  the  burden  of  taxation  cannot  be 


102 


TAXATION   REPORT. 


secured  as  between  the  different  cities  and  towns,  some  mit- 
igation of  the  present  inequalities  is  both  desirable  and  pos- 
sible ;  and  it  is  as  a  step  in  this  direction  that  we  recommend 
the  partial  use  of  population  as  a  basis  for  the  distribution 
of  the  inheritance  tax  revenue.  While  there  will  probably 
be  a  loss  to  Boston  and  other  cities  and  towns,  that  loss  is 
lessened  by  the  partial  use  of  valuation  as  a  basis  of  distri- 
bution. The  extent  of  the  loss  has  been  estimated  by  us  on 
the  assumption  of  an  annual  yield  of  $2,500,000  from  the 
inheritance  tax.  If  that  estimate  should  prove  too  small  (as 
may  very  possibly  be  the  case) ,  the  loss  would  be  in  many 
cases  wiped  out.  In  any  event,  we  recommend,  in  a  later 

See  page  104.  part  of  our  report,  other  new  tax  resources  for  these  places, 
which  in  our  judgment  will  prevent  them  from  having  to  face 
any  financial  deficit  whatever  as  the  net  result  of  all  the 
changes  we  propose.  The  only  places  which  must  lose, 
under  our  proposals,  are  those  which,  because  of  the  present 
concentration  of  intangible  personalty  among  their  tax  re- 
sources, have  been  enjoying  an  unduly  favored  position. 
Even  for  these  there  will  be  compensations  in  the  proposed 
readjustment,  while  such  loss  as  they  finally  sustain  is  inev- 
itable under  any  rational  scheme  of  reform. 

For  the  better  understanding  of  the  effect  of  the  proposed 
distribution  we  have  caused  calculations  to  be  made  (which 
will  be  found  in  the  Appendix)  as  to  its  effect  on  three 
groups  of  places,  namely:  (1)  nineteen  cities,  including 
Boston,  Cambridge,  Springfield,  Worcester,  and  the  other 
larger  cities  of  the  Commonwealth;  (2)  fourteen  towns  of 
the  class  which  would  certainly  lose,  such  as  Cohasset,  Man- 
chester, Nahant,  Falmouth;  (3)  twenty-nine  towns  in  which 
the  burden  of  taxation  is  now  heavy,  and  which  would  find 
relief.  The  calculations  as  to  these  (all  based  on  an  estimate 
of  $2,500,000  annual  revenue  from  the  inheritance  tax)  suffice 
to  show  the  general  drift  of  the  proposed  changes.  In  con- 
sidering them,  we  would  ask  the  General  Court  to  bear  in 
mind  also  the  other  changes  we  have  proposed  elsewhere,  as 

Bee  page  104.  to  new  taxes  in  the  more  prosperous  places  of  class  1,  and 
as  to  the  transference  of  the  expenditures  for  county  pur- 


See  Appendix 
II.,  Table  E. 


INHERITANCE  TAX  REVENUE.  103 

poses,  which  would  operate  still  further  to  relieve  places  in  see  page  112. 
class  3. 

One  further  point  on  the  financial  management  of  the 
inheritance  tax  calls  for  consideration,  —  the  regularity  of 
its  yield.  To  be  a  satisfactory  source  of  revenue  and  a  con- 
venient substitute  for  existing  revenues  it  should  be  guarded 
against  sudden  or  great  fluctuations.  It  is  possible  that  the 
deaths  of  a  few  persons  of  large  means  in  one  year,  and  the 
absence  of  such  deaths  in  another  year,  would  cause  such 
fluctuations.  How  great  might  be  the  irregularity  in  the 
yield  thus  brought  about  we  have  no  means  of  judging; 
but,  if  it  be  feared  that  inconvenience  and  financial  disorder 
would  result  from  this  cause,  a  remedy  could  be  applied  by 
creating  a  reservoir  in  the  State  treasury,  from  which  a  regu- 
lar supply  could  be  allowed  to  flow  to  the  several  towns  and 
cities.  We  suggest  that  it  be  provided  that  so  much  of  the 
annual  revenue  from  the  inheritance  tax  as  exceeds  $2,500,000 
be  not  distributed,  but  be  held  as  a  fund  in  the  State  treasury, 
to  grow  by  accumulation  until  the  total  amount  so  held  reaches 
one  year's  estimated  revenue,  namely,  $2,500,000.  From 
this  accumulated  fund  any  later  deficiency  in  the  yield  below 
the  fixed  sum  of  $2,500,000  could  be  made  up.  If  the  reve- 
nue proves  to  exceed  largely  the  amount  we  have  estimated, 
and  yields  not  only  the  $2,500,000  annually  but  enough  to 
accumulate  the  extra  supply,  then  thereafter  the  total  reve- 
nue, however  large  it  may  be,  can  be  distributed.  If  the 
revenue  should  prove  less  than  we  have  supposed,  a  new  re- 
adjustment on  the  same  plan  could  be  made.  Any  arrange- 
ment of  this  sort  must  be  tentative,  and  subject  to  modification, 
as  experience  shows  the  revenue  from  the  new  tax  to  be  greater 
or  less  than  we  have  estimated. 

It  deserves  also  to  be  considered  that  the  care  and  man- 
agement of  so  large  a  fund  would  bring  additional  burdens 
and  responsibilities  on  the  State  treasury,  and  that  it  is  a 
question  whether  such  heavy  additions  to  its  financial  respon- 
sibilities are  expedient.  On  the  other  hand,  the  treasury 
now  holds  large  sums,  has  large  trust  funds  to  invest  and 
large  balances  to  manage,  and  therefore  would  not  be  charged 


104  TAXATION   REPORT. 

with  unfamiliar  duties,  but  only  with  added  duties  of  a  fa- 
miliar kind.  We  commend  this  part  of  the  subject  to  the 
further  consideration  of  the  General  Court.  As  the  inheri- 
tance tax,  if  it  should  be  adopted,  would  produce  but  little 
revenue,  if  any,  for  two  years  after  its  enactment,  this  as- 
pect of  the  management  needs  less  immediate  attention,  and 
may  be  reserved  for  further  consideration  and  for  final  settle- 
ment at  a  later  stage  in  the  course  of  the  legislation  on  tax 
reform. 

A  Tax  on  Occupants  of  Habitations. 

Bee  page  se.  ^e  have  said,  when  discussing  the  possibility  of  an  income 

tax,  that  some  contribution  in  proportion  to  income  enjoyed 
would  be  a  desirable  addition  to  the  tax  system  of  the  Com- 
monwealth. In  addition  to  the  tax  on  inheritances  and  suc- 
cessions, something  more  in  the  way  of  immediate  and  direct 
contributions  from  present  incomes  seems  to  us  desirable, 
both  as  a  supplement  to  the  inheritance  tax  and  as  an  addition 
to  the  financial  resources  available  for  public  expenditures. 
For  this  end  we  recommend  for  adoption  by  the  General 
Court  a  tax  on  presumed  or  estimated  income,  based  on  the 
expenditure  of  the  tax  payer  for  dwelling-house  purposes. 
We  propose  that  a  tax  shall  be  levied  on  all  persons  occupy- 
ing dwellings  of  an  annual  rental  value  of  more  than  $400, 
at  the  rate  of  ten  per  cent,  on  the  excess  of  rental  value  over 
that  sum.  We  propose  to  levy  no  tax  of  this  sort  on  persons 
whose  incomes  are  so  moderate  that  their  expenditure  for 
dwelling  accommodation  is  not  over  $400  a  year.  Those 
whose  income  is  such  that  they  exceed  this  expenditure  for 
their  dwellings,  are  to  pay,  not  in  proportion  to  their  total 
dwelling  rental,  but  in  proportion  to  the  excess  of  rental 
over  the  exempted  limit  of  $400.  Thus,  a  person  occupying 
a  house  whose  rental  value  was  $500  would  pay  a  tax  of  $10 
a  year,  this  being  ten  per  cent,  on  the  excess  of  the  rental 
value  over  $400.  A  person  occupying  a  house  whose  rental 
value  was  $600  would  pay  a  tax  of  $20 ;  a  house  of  $800 
rental,  $40  ;  a  house  of  $1,200  rental,  $80  ;  and  so  on.  The 
tax,  it  will  be  observed,  is  on  the  occupier  of  a  dwelling, 


HABITATION  TAX.  105 

and  of  a  dwelling  only.  Houses  or  parts  of  houses  used  for 
business  purposes  are  in  no  way  affected  by  it.  The  tax  is 
to  be  levied  on  the  occupier,  whether  he  be  owner  or  tenant. 
If  owner,  it  is  a  tax  on  his  general  income,  additional  to  the 
direct  tax  which  he  pays  as  owner  of  the  house.  If  tenant, 
it  is  again  a  tax  on  his  general  income,  separate  from  the 
direct  tax  which  the  landlord  pays  on  the  house.  In  either 
case,  it  is  a  tax  on  presumed  or  estimated  income,  propor- 
tioned (in  the  manner  described)  to  the  expenditure  for 
dwelling  accommodation. 

In  the  bill  which  we  submit  for  this  tax,  we  have  endeav- 
ored to  make  appropriate  provision  for  the  difficult  cases 
which  would  need  to  be  considered  in  its  administration  :  for 
apartment  houses,  where  the  separate  apartments  or  tene- 
ments may  be  above  or  below  the  exempted  amount ;  for 
buildings  occupied  partly  for  trade  and  partly  as  dwellings ; 
for  boarding  and  lodging  houses ;  and  so  on.  As  to  the 
specific  legislation  which  seems  to  us  best  for  these  details, 
we  refer  to  the  several  clauses  of  the  bill.  We  wish  here  to  see  Appendix 

T      R 

bring  to  the  attention  of  the  General  Court  the  advantages 
of  such  a  tax,  which  seem  to  us  to  outweigh  its  disadvantages, 
undeniable  though  the  disadvantages  be. 

It  may  be  contended  that  such  a  tax  is  unequal  in  its  opera- 
tion. It  bears  more  heavily  on  a  man  of  large  family  than 
on  one  of  small  family,  since  the  former  will  probably  spend 
a  larger  proportion  of  his  income  on  dwelling  accommoda- 
tion. It  may  not  reach  at  all  a  bachelor,  perhaps  of  good 
income,  yet  not  called  on  to  spend  much  of  it  for  his  lodg- 
ings. In  general,  expenditure  for  dwellings  is  only  a  rough 
and  uncertain  test  of  income.  Two  men  of  the  same  income 
may  occupy  very  different  sorts  of  houses ;  while,  on  the 
other  hand,  a  rich  man  and  a  man  of  moderate  means  may 
occupy  houses  of  the  same  general  character.  As  a  man 
grows  richer,  while  he  will  probably  spend  more  for  his 
dwelling,  it  is  very  possible  that  he  will  not  spend  a  sum 
larger  in  proportion  to  his  increased  means. 

These  disadvantages  are  real.  As  compared  with  an  ideally 
arranged  and  ideally  administered  income  tax,  this  form  of  tax 


106  TAXATION  REPORT. 

is  not  to  be  commended.  But  no  perfect  income  tax,  indeed, 
no  perfect  tax  of  any  sort,  is  within  reach ;  and  we  must 
compare  any  proposed  tax,  not  with  the  best  that  could  be 
got  under  ideal  conditions,  but  with  the  best  that  is  practi- 
cally available.  Every  system  of  taxation  brings  occasional 
hardship  and  inequality.  The  essential  question  is  whether 
a  given  method  of  taxation  secures  on  the  whole  substantial 
justice,  can  be  administered  smoothly,  and  will  yield  a  large 
and  regular  revenue.  A  tax,  moreover,  must  be  considered 
not  by  itself  alone,  but  in  connection  with  the  nature  and 
effects  of  other  taxes  imposed  side  by  side  with  it.  The 
see  general  proposed  tax,  in  combination  with  the  other  changes  we 

summary  of 

recommenda      recommend,  seems  to  us  not  only  to  be  greatly  better  than 

tions,  page  120. 

what  we  now  have,  but  to  promise  better  results  than  any 
other  available  method. 

The  tax  begins  at  a  very  moderate  rate  (being  levied  only 
on  excess  of  rental  over  $400),  and  it  becomes  heavier  as  the 
scale  of  dwelling  accommodation  rises.  It  may  be  true  that 
for  the  very  rich  the  scale  of  tax  does  not  rise  in  proportion 
to  the  total  income.  But,  on  the  other  hand,  the  inheritance 
tax,  as  proposed  by  us,  bears  with  its  full  weight  on  the 
rich,  while  it  is  subject  to  exemption  and  abatement  for 
those  of  small  or  moderate  means.  We  have  recommended, 
under  the  inheritance  tax,  exemptions  of  estates  of  $10,000 
and  less,  and  abatements  on  estates  up  to  $25,000,  while 
estates  exceeding  $25,000  pay  tax  on  their  full  value.  Each 
of  these  taxes,  the  inheritance  tax  and  the  house  rentals  tax, 
tends  to  supplement  the  other. 

The  advantages  of  a  tax  on  house  rentals  can  be  easily 
stated.  It  is  clear,  almost  impossible  of  evasion,  easy  of 
administration,  well  fitted  to  yield  a  revenue  for  local  uses, 
and  certain  to  yield  such  a  revenue.  It  is  clear,  because  the 
rental  value  of  a  house  is  comparatively  easy  to  ascertain. 
The  tax  is  based  on  a  part  of  a  man's  affairs  which  he  pub- 
lishes to  all  the  world.  It  requires  no  inquisition  and  no 
inquiry  into  private  matters  ;  it  uses  simply  the  evidence  of 
a  man's  means  which  he  already  offers.  We  have  provided 
that  a  tax  payer  may  either  declare  the  value  of  the  dwelling 


HABITATION  TAX.  107 

he  occupies  or  leave  it  to  be  estimated  by  assessors  ;  the 

matter  being  one  which,  in  the  majority  of  cases,  can  be  so 

nearly  estimated  without  declaration  by  the  tax  payer  that  it 

is  not  very  material  whether  he  hands  in  a  statement  or  does 

not.     It  cannot  be  evaded  except  by  change  in  the  style  of 

living,  which  few  people,  if  any,  would  undertake  because 

of  a  moderate  tax.     We  have  endeavored  to  provide,  in  the  see  Appendix 

bill  submitted,  for  the  due  assessment  of  persons  dwelling  in 

apartment  houses  and  in  hotels.     We  have  provided  also  for 

the  payment  of  two  taxes  in  respect  of  house  rentals  by  those 

persons  who  are  so  well-to-do  as  to  occupy  for  their  own 

use  two  separate  houses  in  the  Commonwealth ;  for  the  bill 

provides  that  (except  in  case  of  mere  change  of  residence) 

occupancy  of  any  dwelling  for  a  period  of  three  months  or 

more  shall  be  ground  for  the  collection  of  the  tax.     Hence 

those  who  have  winter  and  summer  houses  will  pay  this  tax 

in  both  localities  in  which  they  reside. 

It  may  be  objected  that  the  tax  is  on  real  estate,  and  is 
additional  to  the  taxes  already  levied  on  real  estate.  As  to 
the  owner  of  a  dwelling  who  occupies  it  for  his  own  use,  it 
is  true  that  he  will  pay  not  only  the  present  taxes  on  the  real 
estate  but  another  tax  based  on  the  rental  value  of  his  house. 
But  this  additional  tax  is  levied  with  respect  to  the  income 
which  he  must  have,  if  able  to  live  in  an  expensive  house. 
No  one  can  own  and  occupy  a  house  whose  rental  value  is 
$600  or  $800  or  $1,000  a  year,  unless  he  has  some  consider- 
able income  from  other  sources  ;  and  on  that  income  he  may 
be  fairly  called  on  to  pay  a  tax,  if  it  be  not  unduly  heavy, 
and  be  proportioned  in  some  approximate  way  to  his  income. 
So  far  as  tenants  of  dwellings  are  concerned,  the  owners  are 
called  on  to  pay  the  direct  tax  on  the  real  estate,  and  the 
tenants  alone  to  pay  the  proposed  tax  on  rental  values.  If, 
indeed,  this  second  tax  were  so  heavy  as  to  cause  tenants  to 
avoid  dwellings  whose  occupancy  would  subject  them  to  it, 
and  were  to  cause  them  to  seek  cheaper  houses,  it  might 
indirectly  affect  the  demand  for  houses,  and  so  might  affect 
their  rentals.  But  the  rate  of  tax,  as  proposed,  is  very  low 
on  houses  of  moderate  rentals,  and  advances  slowly  on 


108  TAXATION   KEPORT. 

houses  of  higher  price.  We  do  not  believe  it  would  cause 
any  appreciable  shifting  in  the  selection  or  tenancy  of  dwell- 
ings ;  for  comfort  or  luxury  in  dwellings  is  highly  valued  by 
most  men,  and  they  will  hardly  modify  their  expenditure  on 
it  because  of  a  moderate  tax.  We  believe,  therefore,  that 
this  tax  would  operate,  as  it  is  designed  to  operate,  not  as  a 
tax  on  real  estate,  but  as  a  tax  on  the  incomes  of  those  who 
are  prosperous  enough  to  dwell  in  comfort  or  in  luxury.  We 
may  remark,  also,  that  its  financial  yield  would  be  an  impor- 
tant addition  to  the  revenue  of  the  towns  and  cities  in  which 
it  would  be  levied,  and  would  operate,  so  far  as  this  went,  to 
make  possible  a  reduction  in  the  rate  of  direct  taxation  on 
real  estate. 

This  brings  us  to  the  financial  aspects  of  the  proposed  tax, 
in  which  we  find  additional  strong  reasons  for  its  adoption. 
It  is  obvious  that  it  would  be  collected  chiefly  in  the  cities, 
in  certain  of  the  larger  and  more  prosperous  towns,  and  in 
some  of  the  smaller  towns  whose  climate  and  site  cause  them 
to  be  resorted  to  by  persons  of  means.  The  agricultural 
towns  would  be  almost  wholly  outside  its  scope.  The  strictly 
manufacturing  cities  and  towns  would  be  little  aifected.  In 
the  other  cities,  and  in  the  towns  affected  by  it,  the  tax 
would  be  collected  solely  from  those  able  to  live  in  comfort 
and  luxury,  and  would  be  of  considerable  weight  only  on 
the  well-to-do.  In  these  places,  also,  it  would  be  of  financial 
importance.  These  are  precisely  the  parts  of  the  State  which 
would  lose  financially  from  the  readjustments  proposed  by 
us  in  connection  with  the  inheritance  tax.  As  we  have 
see  page  102  already  pointed  out,  these  places  would  gain  less  from  the 
distribution  of  the  proceeds  of  the  inheritance  tax  than  they 
would  lose  by  giving  up  the  revenue  now  derived  from  the 
taxation  of  intangible  personal  property.  This  difference 
would  be  more  than  made  up,  in  most  places,  by  the  new 
revenue  from  the  house  rentals  tax. 

The  revenue  from  this  tax  must  be  almost  entirely  a  mat- 
ter of  estimate.  There  is  hardly  any  basis  on  which  to  make 
any  specific  statement  in  figures.  But  we  have  made  a  rough 
calculation  as  to  one  ward  in  Boston,  that  containing  the 


HABITATION  TAX.  109 

Back  Bay  district,  and  we  think  it  well  within  bounds  to  put 
the  tax  revenue  in  this  single  ward  at  about  $300,000.  For 
the  whole  city  of  Boston  we  think  $500,000  a  low  estimate 
of  the  proceeds.  The  financial  loss  of  Boston  from  the 
rearrangements  we  have  proposed  elsewhere  would  be  fully 
made  up  by  this  sum.  Newton  and  the  town  of  Brookline 
would  secure  a  large  revenue ;  the  same  would  be  the  case 
in  cities  like  Cambridge,  Worcester,  Springfield.  Similarly, 
the  summer  resort  towns,  whose  present  gains  from  the 
taxes  on  intangible  personalty  would  cease  on  the  adoption 
of  our  proposals,  would  find  some  compensation  in  the  rev- 
enue from  the  new  tax.  The  introduction  of  this  tax,  in 
fact,  would  prevent  any  financial  shock  from  the  other 
important  changes  which  have  been  proposed,  and  would 
enable  the  Commonwealth  to  enter  at  once,  without  any 
painful  process  of  readjustment,  on  a  new,  and,  as  we 
believe,  a  better  system  of  taxation. 

In  view  of  the  imposition  of  this  new  tax  based  on  pre- 
sumable income,  we  recommend  the  abolition  of  the  present 
tax  on  incomes  "from  profession,  trade  or  employment." 
We  make  this  recommendation,  not  only  because  the  reten- 
tion of  the  existing  tax  side  by  side  with  that  proposed  must 
result  in  double  taxation  of  the  same  object,  but  because  the 
present  tax  has  proved  no  less  difficult  of  satisfactory  admin- 
istration than  the  other  parts  of  the  present  method  of  taxing 
intangible  personalty.  As  matters  stand,  the  partial  income 
tax  which  the  statute  imposes  is  assessed  and  collected  in  the 
most  uncertain  and  unequal  manner.  Some  persons  in  re- 
ceipt of  salaries  that  are  well  known  are  taxed  unfailingly 
on  such  income,  and  this  is  especially  the  case  with  public 
officers,  whose  salaries  (usually  very  moderate)  are  pub- 
lished in  official  documents.  Many  other  persons,  in  receipt 
of  larger  salaries  from  corporations  or  from  private  employ- 
ers, never  hear  of  the  income  tax.  Physicians  and  lawyers 
who  earn  incomes  from  their  professions  are  taxed  by  guess- 
work, often  not  at  all,  very  rarely  with  certainty  and  ac- 
curacy. The  same  is  true  of  business  men  ;  except  that  here, 
in  the  cases  where  the  income  tax  is  assessed  and  collected, 


110  TAXATION   EEPORT. 

it  is  additional  to  the  taxes  on  the  real  estate,  machinery  and 
stock  in  trade  of  the  business  carried  on,  and  so  is  open,  in 
part  if  not  in  whole,  to  the  charge  of  double  taxation.  In 
Seepages:.  fact?  the  difficulties  which  we  have  referred  to  elsewhere, 
when  discussing  the  proposal  for  a  general  income  tax,  have 
appeared  in  full  evidence  with  the  existing  income  tax.  On 
every  ground,  therefore,  and  especially  in  view  of  the  pro- 
posed tax  on  house  rentals,  we  recommend  its  abolition. 


General  Remarks  on  Proposed  Changes. 

We  are  aware  that  both  of  the  additions  to  the  tax  system 
which  we  propose  are  novel  in  this  Commonwealth,  and,  there- 
fore, liable  to  be  received  with  scepticism.  We  are  aware, 
also,  that  the  other  important  change  which  we  propose  in 
connection  with  these  additions,  the  dispensing  with  the  direct 
taxation  of  securities,  will  be  regarded  in  many  quarters  as 
a  violation  of  the  principle  that  all  should  pay  in  proportion 
to  their  means.  We  have,  nevertheless,  been  impelled  to 
recommend  these  several  changes  for  adoption  by  the  Qen- 
eral  Court,  because  we  conceive  radical  measures  to  be  neces- 
sary. The  simple  system  of  the  general  property  tax,  adopted 
in  the  days  of  simple  conditions,  is  antiquated.  The  com- 
plicated industrial  life  of  modern  days  calls  for  a  more  com- 
plex and  more  varied  system  of  taxation.  No  one  tax,  resting 
solely  on  the  apparently  simple  principle  of  taxing  every  man 
in  proportion  to  what  (in  the  eye  of  the  law)  is  his  property, 
will  meet  the  difficulties  of  the  situation.  The  Commonwealth 
has  already  departed  from  the  simple  lines  of  the  old  system, 
in  the  existing  corporation  taxes,  savings  bank  taxes,  collat- 
eral inheritance  tax.  Other  and  further  innovations  seem  to 
us  to  be  necessary.  We  have  hence  proposed  new  taxes  that 
promise  to  be  effective,  as  well  as  the  abolition  of  parts  of 
the  old  system  that  do  not  work  satisfactorily  ;  thus  securing 
greater  variety  in  the  methods  of  taxation,  to  correspond  to 
the  growing  complexity  in  the  ownership  and  distribution 
of  wealth. 

The  circumstance  that  Massachusetts  is  one  of  the  great 


CHARACTER   OF   PROPOSED   CHANGES.  Ill 

nation  of  United  States  increases  the  complexities  of  her 
industrial  life,  and  causes  peculiar  difficulties  in  the  selec- 
tion of  appropriate  methods  of  taxation.  The  ownership  of 
property  is  intertwined  between  the  citizens  of  the  several 
States ;  and  each  State,  inevitably,  is  desirous  of  making 
sure  that  its  own  citizens  shall  make  full  contributions,  and 
that  its  own  fiscal  needs  shall  be  fully  met.  We  have  tried 
to  devise  a  system  of  taxation  which  shall  not  trench  on  the 
field  which  should  fairly  be  left  to  other  jurisdictions,  and 
which  yet  shall  secure  in  our  own  jurisdiction  and  among 
our  own  citizens  a  reasonable  and  workable  adjustment  of 
the  burdens  of  taxation.  We  have  tried  to  recommend 
changes  which,  if  followed  in  other  States  as  well,  would 
not  cause  double  taxation,  and  would  result  for  the  country 
as  a  whole  in  a  sound  and  consistent  system  of  local  and 
State  taxation.  We  believe  the  Commonwealth  may  take 
a  just  pride,  here  as  in  other  parts  of  her  legislation,  in 
taking  the  lead,  and  in  carrying  out  an  important  reform 
that  may  serve  as  an  example  to  other  States. 

It  is  because  of  the  difficulties  of  adjustment  with  relation 
to  other  States  that  we  have  proposed  no  changes  that  single 
out,  tor  separate  taxation,  property  or  evidences  of  property 
outside  of  the  Commonwealth.  We  have  said  elsewhere  that  see  page  82. 
the  holders  of  such  property,  spending  and  enjoying  incomes 
within  our  borders,  should  contribute  in  some  degree  to  our 
public  burdens.  But  we  have  thought  it  best  to  make  recom- 
mendations for  their  taxation,  not  merely  because  and  in 
so  far  as  they  are  owners  of  foreign  property  or  foreign 
securities,  but  because  and  in  so  far  as  their  general  means 
enable  them  to  pay  taxes.  The  changes  which  we  recom- 
mend, if  carried  out,  will  reach  persons  of  means,  whatever 
shape  their  means  may  take.  The  new  taxes  are  irrespective 
of  the  source  of  incomes  or  the  nature  of  their  property. 
We  have  proceeded  on  the  assumption  that  property  situated 
outside  of  the  State  already  pays,  as  property,  taxes  wher- 
ever situated,  and  that  it  is  the  concern  of  the  State  or 
country  within  whose  jurisdiction  it  exists  to  tax  it  there. 
Within  our  own  jurisdiction,  we  propose  to  continue  the 


112  TAXATION   REPORT. 

taxation  of  property  as  such ;  and,  farther,  we  propose  to 
tax  persons  of  means,  whatever  form  or  source  their  means 
may  have.  We  hope  thus  to  secure  an  adequate  revenue, 
by  a  general  system  of  taxation  adjusted  fairly  both  with 
reference  to  other  States  and  with  reference  to  the  different 
classes  of  society  in  our  own  State. 

The  specific  additions  to  our  tax  system,  by  which  we 
propose  to  secure  these  results,  though  new  in  this  country, 
are  by  no  means  new  in  the  experience  of  other  civilized 
countries.  Taxes  on  inheritances  and  successions  have  been 
imposed  for  nearly  a  century  in  Great  Britain,  and  of  late 
have  been  much  increased  and  extended,  so  as  to  apply  to 
realty  as  well  as  to  personalty,  and  to  reach,  at  their  highest, 
eight  per  cent,  on  the  property  passing  at  death.  In  France 
also  a  system  of  inheritance  taxes  is  of  long  standing ;  and 
in  many  countries,  including  other  States  of  the  Union, 
there  is  now  a  movement  toward  the  adoption  and  extension 
of  such  taxes.  The  other  new  tax  which  we  propose  —  on 
occupiers  of  habitations  —  is  also  of  long  standing  in  Eng- 
land; though  in  that  country  (since  there  is  a  general  in- 
come tax)  the  habitation  tax  is  at  a  lower  rate  than  proposed 
by  us.  In  France,  where  there  is  no  income  tax,  the  habi- 
tation tax  has  been  in  use  for  a  century,  at  practically  the 
same  rate  which  we  propose  in  this  country.  Such  a  tax  was 
strongly  urged  in  New  York  by  an  able  commission  appointed 
in  1870  to  examine  the  laws  of  taxation  in  that  State.  Though 
novel,  it  is  not  untried  or  unconsidered,  and  deserves  the 
attention  and  unbiassed  consideration  of  the  General  Court. 


COUNTY  EXPENSES  TO  BE  ASSUMED  BY  THE  STATE. 
see  page  si.  -^e  nave  stated,  in  more  than  one  part  of  this  report,  our 

opinion  that  the  burden  of  taxation  should  be  lessened  for 
the  now  overburdened  farming  towns  of  the  State.  Some 
substantial  improvement  in  this  direction  will  be  secured  by 
the  proposed  distribution  of  the  proceeds  of  the  inheritance 
tax.  But  some  further  readjustment  seems  to  us  to  be  called 
for. 


COUNTY   EXPENSES.  113 

An  appropriate  place  for  this  further  readjustment  is  in 
the  present  taxes  for  county  purposes.  The  very  fact  that 
certain  expenses  are  now  met  by  the  county  authorities  indi- 
cates that  they  are  incurred  for  purposes  not  strictly  local, 
but  of  general  importance.  County  expenses  are  now  met 
by  the  county  taxes,  which  are  additions  to  the  tax  levies  of 
the  several  cities  and  towns.  The  assumption  of  county 
expenses  by  the  State  would  lower  by  so  much  the  local  tax 
rates.  The  reduction  would  be  greatest  in  those  parts  of  the 
State  where  the  county  expenses  are  largest  in  proportion  to 
the  total ;  and  these,  it  happens,  are  usually  the  sections  of 
the  State  where  the  burden  of  taxation  now  is  most  heavy.* 

The  total  expenditures  of  the  counties  for  the  year  1896 
wTere  $3,549,206.71.  Of  this  sum,  however,  a  part  repre- 
sents not  real  expenses,  but  only  the  repayment  of  temporary 
loans  made  in  anticipation  of  taxes.  Setting  aside  this  large 
item  ($1,161,000),  we  have  the  following  as  the  real  expenses 
of  the  counties  for  1896  :  — 

Court  expenses, $889,790  18 

Care  of  prisoners,       ......          367,180  57 

Truant  schools,    .  47,148  51 


Total  expenses  connected  with  the  admin- 
istration of  justice,   $1,304,11926 

Interest  on  loans, 97,328  26 

Highways, 137,200  33 

County  buildings, 330,163  14 

Executive  salaries, 55,315  36 

Other  expenses, 464,080  36 

Total, $2,388,206  71 

These  figures  state  the  gross  expenditures  of  the  counties, 
excepting  debt  redemption ;  the  net  expenditures,  including 

*  The  rate  of  the  county  tax  for  each  $1,000  of  assessed  property  was  as  follows 
in  the  several  counties  in  the  year  1896 :  — 


Norfolk, $ 0  70 

Essex,  .    ' 89 

Middlesex, 95 

Barnstable, 1  10 

Worcester, 1  10 

Hampden 1  30 


Plymouth,    .        .        .        .        .        .  $1  30 

Franklin, 1  50 

Bristol, 1  60 

Hampshire 1  60 

Berkshire 1  60 

Dukes 1  80 


114  TAXATION  REPORT. 

debt  redemption,  —  county  expense  minus  county  income  — 
correspond  to  the  present  annual  county  tax.  The  amount 
raised  by  taxation  for  county  purposes  in  1896  was  $2,713,079. 

It  will  be  seen  that  the  largest  items  —  court  expenses  and 
care  of  prisoners  —  are  connected  with  the  administration  of 
justice.  The  expenses  for  truant  schools  may  also  be  reck- 
oned under  this  head;  for  truant  schools,  while  connected 
with  the  common  school  system,  are  used  only  for  pupils 
under  judicial  sentence  for  truancy.  County  buildings  are 
chiefly  court  houses  and  prisons,  so  that  the  expenditure  for 
these  belongs  under  the  same  head.  These  are  purposes 
which  concern  the  State  at  large  quite  as  much  as  any  one 
local  body.  The  State  already  pays  a  large  part  of  the  ex- 
penditures for  the  administration  of  justice,  and  more  espe- 
cially the  salaries  of  the  judges.  There  is  no  ground  why  all 
such  expenses  should  not  become  chargeable  to  the  Common- 
wealth. 

It  is  further  to  be  remarked  that  the  work  of  the  courts 
in  recent  years  shows  a  marked  increase,  out  of  proportion 
with  the  relative  increase  of  population,  in  the  large  centres 
of  business.  This  is  not  owing  to  the  excess  of  the  litigious 
spirit  in  such  places,  and  but  in  small  part  to  the  greater 
amount  of  business  transacted  there,  but  to  other  causes, 
•notably  the  preference  of  litigants  and  counsel  in  the  large 
number  of  cases  in  which  there  is  a  choice  of  forum.  The 
result  is,  that  such  places  are  called  upon  to  pay  more  than 
their  fair  proportion  of  the  expenses  of  the  courts.  Boston, 
as  would  naturally  be  expected,  is  the  most  conspicuous 
example  of  this.  Nearly  two-thirds  of  the  business  of  the 
supreme  judicial  court  and  half  of  that  of  the  superior  court 
is  done  in  that  city. 

As  to  one  important  part  of  the  county  expenses,  those  for 
the  care  of  prisoners,  a  recommendation  for  their  assumption 
by  the  State  has  already  been  made  to  the  General  Court  by 
another  Commission,  on  grounds  which  reinforce  those  here 
given.  The  Commission  appointed  in  1896  to  investigate  the 
public,  charitable  and  reformatory  interests  and  institutions 
recommended  that,  for  the  best  administration  of  the  prisons, 


COUNTY  EXPENSES.  115 

all  should  be  placed  under  the  central  control  of  the  Com- 
monwealth and  be  maintained  by  the  Commonwealth.  The 
grounds  of  intrinsic  advantage  which  are  stated  by  the  Com- 
mission in  support  of  the  change  are  strengthened  by  those 
which  we  have  given  as  to  the  better  adjustment  of  the  bur- 
den of  taxation. 

Still  another  large  part  of  the  county  expenses  is  for  county 
highways.  Here  also  is  an  expenditure  which,  from  the  very 
fact  that  it  is  borne  by  the  counties  and  not  by  the  towns,  is 
recognized  to  be  not  for  local  purposes  but  for  purposes  of 
wider  advantage.  The  Commonwealth  already  has  provided 
liberally  for  highways,  and  in  the  State  Highway  Commis- 
sion has  a  body  experienced  in  their  construction  and  main- 
tenance. It  would  seem  that  the  Commonwealth  might 
advantageously  assume  the  present  county  expenses  for 
highways. 

The  items  in  the  county  expenditures  to  which  we  have 
referred  include  so  nearly  the  whole  of  them  that  there  is  no 
substantial  ground  for  attempting  a  separation  between  ex- 
penditures which  the  Commonwealth  may  assume  with  advan- 
tage and  those  which  it  may  not.  We  recommend,  therefore, 
both  as  a  means  of  lowering  the  local  tax  rates  in  those  parts 
of  the  Commonwealth  where  they  are  now  unduly  high,  and 
for  the  better  administration  of  at  least  a  good  part  of  the 
affairs  now  under  county  administration,  that  county  income 
be  covered  into  the  State  treasury  and  that  all  county  ex- 
penses be  assumed  by  the  State,  and  defrayed  from  the  gen- 
eral revenue  of  the  Commonwealth.  The  financial  effects  of 
this  change,  and  the  resources  which  we  think  the  Common- 
wealth could  dispose  of  for  meeting  this  increased  expense, 
we  shall  consider  presently.  Whether  the  change  should  See  page  ne. 
further  entail  a  readjustment  of  the  administrative  force  now 
in  charge  of  the  county  expenditures  and  the  substitution  of 
State  officers  for  the  present  boards  of  county  commissioners, 
does  not  come  within  the  range  of  subjects  on  which  we  are 
directed  to  report,  and  we  can  only  recommend  this  im- 
portant aspect  of  the  question  to  the  attention  of  the  General 
Court. 


116  TAXATION  REPORT. 

One  other  change  calls  for  attention  in  the  distribution  of 
expenditure  between  the  Commonwealth  and  the  several 
cities  and  towns.  The  Commission  on  charitable  and  reform- 
atory interests,  whose  recommendations  for  the  assumptions 
of  all  prison  expense  by  the  Commonwealth  we  have  just 
referred  to,  recommended  also  that  the  care  and  support  of 
the  insane  poor  be  assumed  by  the  Commonwealth.  This 
change  would  increase  the  expenditure  of  the  Commonwealth, 
and  diminish  by  so  much  the  expenditure  of  the  several  cities 
and  towns  now  supporting  these  insane  poor.  The  number 
of  these  unfortunate  persons  was  estimated  by  the  Commis- 
sion to  be  approximately  thirteen  hundred.  The  change 
recommended,  after  careful  investigation  by  a  Commission 
appointed  for  the  purpose,  deserves  the  attentive  considera- 
tion of  the  General  Court.  In  its  financial  aspects  it  is  in 
accord  with  the  general  readjustments  of  the  burdens  of  taxa- 
tion which  we  are  now  proposing. 


Corporate  Excess  to  be  applied  to  paying  County  Expenses. 

If  the  transfer  of  county  expenses  to  the  State  were  to 
result  simply  in  a  substitution  of  direct  State  taxes  for  the 
present  county  taxes,  the  change,  though  not  without  some 
consequences  in  the  distribution  of  taxes,  would  not  be  of 
serious  importance.  But  we  propose  that  the  means  for 
meeting  the  present  county  expenses  shall  be  secured,  not 
by  a  State  levy  on  property,  but  from  another  source,  — by 
utilizing  so  much  of  the  present  proceeds  of  the  tax  on  cor- 
porate excess  as  is  now  distributed  among  the  several  cities 
and  towns. 

The  amount  of  county  taxes  was,  in  1895,  $2,624,206  ; 
in  1896,  $2,713,079.  The  amount  of  the  tax  on  corporate 
excess  which  was  due  cities  and  towns  for  distribution  was, 
in  1895,  $2,642,631;  in  1896,  $2,729,665.  The  sums  very 
closely  balance  each  other.  The  State  treasury  could  pay 
the  county  taxes  from  the  yield  of  the  tax  on  corporate 
excess,  without  any  resort  to  direct  State  levy. 

Evidently  the  effect  of  this  change  on  each  individual  city 


USE   OF  CORPORATE  EXCESS.  117 

or  town  would  depend  upon  the  relation  between  the  amount 
it  now  pays  out  for  county  taxes  and  the  amount  it  now 
receives  on  account  of  shares  in  Massachusetts  corporations 
owned  by  its  residents.  If  its  share  of  county  taxes  were 
small  and  the  amount  now  paid  to  it  by  the  State  treasury 
on  corporate  excess  were  large,  it  would  lose.  If  it  hap- 
pened to  be  entitled  to  nothing  at  all  from  the  State  treasury 
on  account  of  shares  owned  by  its  residents,  it  would  cer- 
tainly gain  by  the  full  amount  of  the  county  taxes  now 
levied  upon  it.  If  these  two  sums  balanced  each  other,  it 
would  neither  gain  nor  lose. 

We  have  examined  with  care  the  effect  of  the  proposed 
change  on  the  several  cities  and  towns,  and  the  results  are 
as  follows:  (1)  The  strictly  farming  towns  would  gain, 
practically  without  exception.  Nothing  of  consequence  is 
now  distributed  among  them  on  account  of  shares  owned  by 
their  inhabitants.  The  assumption  of  county  expenses  by 
the  State  would  be  so  much  relief  to  them,  — a  result  which 
we  believe  will  be  admitted  on  all  hands  to  be  desirable. 
(2)  The  small  number  of  towns  in  which,  for  the  reasons  and 
in  the  manner  we  have  elsewhere  set  forth,  there  is  a  large 
accumulation  of  intangible  personal  property,  and  which 
now  receive  large  sums  on  account  of  shares  owned  by 
their  residents,  would  lose.  We  have  pointed  out  already 
how  the  present  system  causes  these  few  towns  to  receive 
large  sums  from  the  State  treasury.  The  loss  to  these  towns, 
while  it  must  be  inevitably  very  unwelcome  to  them,  seems 
to  us  only  a  result  of  a  desirable  reform,  securing  a  more 
equal  adjustment  of  taxes  in  the  State  at  large.  (3)  The 
cities  and  the  larger  towns,  as  a  rule,  would  neither  gain 
nor  lose  seriously.  Some  of  the  wealthier  among  them 
would  sustain  a  loss ;  but  it  is  precisely  these  which  can 
best  afford  a  loss.  For  these,  moreover,  we  have  proposed 
a  new  source  of  revenue  in  another  direction,  in  the  tax  on 
incomes  as  evidenced  by  house  rentals,  which  will  enable 
them  to  face  without  serious  difficulty  the  change  here  pro- 
posed. For  the  better  understanding  of  the  significance  and  ?fe  ^KB!* 
the  consequences  of  the  assumption  of  county  expenses  by 


118 


TAXATION  KEPORT. 


the  State,  and  of  the  application  of  the  taxes  on  corporate 
excess  for  the  payment  of  such  expenses,  we  print  in  the 
Appendix  figures  showing  the  working  of  this  rearrange- 
ment. We  have  selected  cities  and  towns  belonging  to  each 
of  the  classes  mentioned  above,  and  have  calculated  the  gain 
or  loss  from  the  proposed  changes,  thus  enabling  the  General 
Court  to  follow  in  detail  their  result. 


EFFECTS  ON  THE  STATE  FINANCES. 

The  net  effect  of  the  various  changes  which  we  propose 
will  be  to  leave  the  balance  of  State  expenditures  against 
State  receipts  substantially  as  it  is  now,  and  hence  to  require, 
in  the  future  as  in  the  past,  some  resort  to  a  direct  State  tax 
on  property.  The  proceeds  of  the  inheritance  tax,  while 
collected  by  the  State,  will  be  distributed  among  the  several 
cities  and  towns.  The  assumption  of  county  expenses  by 
the  State  will  absorb  the  revenue  which  we  propose  that  the 
State  treasury  shall  secure  from  the  tax  on  corporate  excess. 
Hence  the  State  treasury  will  receive  no  more  than  it  is 
called  on  to  pay  out.  In  past  years,  while  the  State  has  had 
a  large  revenue  from  various  sources,  it  has  yet  been  found 
necessary  to  levy  a  State  tax  of  considerable  amount.  The 
situation  is  indicated  by  the  following  figures  :  — 


ACTUAL  EEVENUE  OF  THB  STATE. 

1895. 

1896. 

Total  State  revenue,    
Of  which  the  sources  were  :  — 
General  property  tax,          

$6,997,801 
1,499,550 

$7,293,880 
1,745,340 

Tax  on  shares  in  Massachusetts  corporations 
owned  bv  non-residents,  ..... 

1,004,826 

1,075,030 

Tax  on  bank  shares  similarly  owned, 
Tax  on  savings  banks,        .... 
Insurance    companies,  foreign  railroad  com 
panics,  mining  companies  and    trust  com 
panics,      
Collateral  inheritance  tax,  .... 
Liquor  licenses,  ...... 
Other  sources,     

432,103 
1,243,725 

496,139 
419,427 
682,099 
1,219,932 

417,398 
1,291,286 

533,577 
275,573 
669,602 
1,286,074 

STATE   FINANCES.  119 

On  some  grounds  it  would  be  desirable  to  provide  for  the 
State  an  independent  and  separate  revenue,  so  ample  as  to 
dispense  with  the  need  of  levying  any  State  tax  on  property. 
Such  a  provision  would  do  away  with  the  difficulties  in  the 
way  of  apportioning  the  State  tax,  — a  process  which  obvi- 
ously tempts  each  local  body  to  put  a  low  valuation  on  the 
property  within  its  borders  as  a  means  of  reducing  its  share 
of  the  State  tax.  But  we  have  concluded  that,  nevertheless, 
it  would  be  expedient  to  retain  the  system  by  which  some 
part  of  the  State  revenue  is  derived  from  a  direct  State  tax. 
As  matters  stand  in  this  Commonwealth,  and  still  more  as 
they  would  stand  if  the  General  Court  adopts  the  changes 
we  recommend,  the  difficulties  of  apportionment  are  not  so 
great  as  they  are  in  States  where  the  direct  tax  is  the  main 
source  of  State  revenue.  With  us  the  State  tax  is  not 
heavy,  the  revenue  from  other  sources  being  large.  The 
Tax  Commissioner  exercises  an  effective  supervision  over 
the  valuation  of  the  cities  and  towns,  and  thus  prevents 
serious  inequalities  in  the  apportionment  of  the  State  tax. 
Finally,  if  the  changes  we  propose  are  adopted,  each  city 
and  town  would  have  something  to  gain  by  a  high  valuation. 
Its  share  of  the  inheritance  tax  (which  is  to  be  distributed 
partly  on  the  basis  of  valuation)  will  be  greater  as  its  assess- 
ment is  higher,  which  must  serve  to  counteract  any  dispo- 
sition to  keep  valuations  low  in  order  to  lessen  the  State  tax. 

While  no  serious  ills  are  thus  likely  to  arise  from  the 
maintenance  of  a  moderate  State  tax,  we  believe  that  some 
gain  will  ensue.  The  temptation  for  any  legislative  body  is 
always  to  be  generous  in  expenditures,  especially  if  the  reve- 
nue at  its  disposal  flows  in  without  resort  to  a  direct  tax  levy. 
We  believe  the  General  Court  will  wish  to  retain  that  sobering 
sense  of  responsibility  in  the  expenditure  of  the  public  reve- 
nues which  arises  with  the  need  of  a  levy  of  immediate  taxes. 
Hence  we  have  judged  it  best  so  to  frame  our  recommendation 
that  in  this  regard  the  situation  will  remain  as  it  now  is,  the 
State  still  provided  with  the  bulk  of  its  revenue  from  inde- 
pendent sources,  yet  still  needing  to  supplement  these  sources 
by  raising  some  moderate  sum  through  taxes  on  property. 


120 


TAXATION   REPORT. 


See  page  92. 


See  page  104. 


See  page  84. 


See  page  112. 
See  page  116. 


See  page  1. 


GENERAL  SUMMARY. 

The  changes  which  we  recommend  in  the  tax  system  of 
the  Commonwealth  may  now  be  summarized  as  follows  :  — 

1.  An  inheritance  tax,  levied  with  respect  to  realty  as 
well  as  to  personalty,  at  the  rate  of  five  per  cent.,  with  an 
exemption  for  estates  not  exceeding  $10,000  and  an  abate- 
ment of  $5,000  on  estates  between  $10,000  and  $25,000. 
The  revenue  from  this  tax  to  be  distributed  from  the  State 
treasury  among  the  several  cities    and   towns,   one-half  in 
proportion  to  population,  one-half  in  proportion  to  assessed 
valuation. 

2.  A  tax  on  occupiers  in  proportion  to  house  rentals, 
only  the  excess  over  $400  of  rental  being  taxable. 

3.  Abolition  of  the  present  taxes  on  intangible  personalty, 
such  as  stocks,  bonds,  loans  on  mortgage,  income ;  the  taxes 
recommended  under  1  and  2  being  relied  on  to  yield  at  least 
as  large  a  revenue  as  is  now  secured  by  the  taxes  to  be 
abolished. 

4.  Assumption  by  the  State  treasury  of  county  expenses. 

5.  Appropriation  by  the  State  of  the  revenue  from  taxes 
on  corporate  excess,  now  distributed  among  the  several  cities 
and  towns. 

In  conclusion,  we  would  say  that  we  are  fully  aware  of  the 
difficulties  of  the  subject,  of  the  objections  that  can  be  urged 
against  the  changes  which  we  propose,  and  of  the  need  of 
still  further  changes  than  those  here  recommended.  We 
have  stated  in  the  beginning  of  this  report  that  we  have 
found  it  necessary  to  confine  our  task  to  certain  fundamental 
problems,  which  underlie  the  main  difficulties  of  the  present 
methods  of  taxation.  If  the  General  Court  should  see  fit  to 
enter  on  legislation  such  as  we  propose  on  these  fundamental 
matters*,  we  believe  it  will  be  found  expedient  to  proceed 
further,  and  revise  the  tax  laws  in  other  directions.  In  any 
such  revision,  the  General  Court  would  be  much  aided  by  a 
preparatory  investigation  at  the  hands  of  a  commission  com- 
posed of  tax  officials,  judicial  officers,  and  others  experienced 
in  the  administration  of  the  laws.  For  the  present,  we  have 


GENERAL   SUMMARY.  121 

endeavored  to  recommend  changes  which  shall  do  away  with 
the  most  unsatisfactory  parts  of  the  existing  system,  and 
make  the  way  easier  for  any  further  changes  in  the  future. 
We  have  endeavored,  to  the  best  of  our  ability,  to  recom- 
mend a  system  which  shall  be  workable,  shall  show  a  spirit 
of  comity  to  sister  States,  shall  not  make  too  sudden  and 
violent  a  change  from  existing  methods,  shall  require  no 
great  readjustments  in  the  financial  situation  either  of  the 
State  or  of  the  great  mass  of  the  towns  and  cities,  and  shall 
remedy  the  most  serious  evils  in  the  present  system.  We 
are  aware  that  the  tax  system,  as  it  would  be  after  the  adop- 
tion of  the  changes  we  recommend,  would  not  be  ideal.  But 
we  think  it  would  be  greatly  improved,  would  be  workable 
and  enforceable,  and  would  prepare  the  way  for  further 
changes  as  need  and  opportunity  arose. 

Respectfully  submitted, 

JAMES  R.  DUNBAR. 
ALVAN  BARRUS. 
T.  JEFFERSON  COOLIDGE. 
F.  W.  TAUSSIG. 


122  TAXATION   REPORT. 


PART    IV. 

SUPPLEMENTARY    REPORT. 

AGRICULTURAL  TOWNS. 

Owing  to  the  multitude  of  diverging  and  contradictory 
theories  on  the  question  of  taxation  that  have  been  submitted 
to  the  present  Commission  "  to  inquire  into  the  expediency 
of  revising  and  amending  the  laws  of  the  Commonwealth 
relating  to  taxation,"  the  shortness  of  time  given  in  which 
to  investigate  so  broad  a  subject  leads  us  to  join  in  the  hymn 
of  the  old  revival  melodies  :  — 

"  Lo,  on  a  narrow  neck  of  land 
Twixt  two  unbounded  seas  we  stand, 
Yet  how  insensible," — 

insensible  to  nearly  every  plea  except  to  tread  the  way  our 
fathers  trod,  compel  all  persons  and  all  property  that  are  pro- 
tected and  benefited  by  the  government  to  contribute  their 
just  proportion  to  its  support,  except  in  a  few  cases  where 
justice  and  equity  demand  a  relief. 

Aside  from  the  exemption  of  a  reasonable  amount  invested 
in  religious,  educational,  and  charitable  institutions,  and  the 
exemption  of  the  poor  and  the  maimed,  any  exemption  that 
relieves  one  class  of  property  and  places  the  burden  upon 
another  causes  to  the  same  extent  an  unjust  increase  of,  if  not 
double,  taxation. 

So  long  as  men  are  human  and  laws  are  made  by  men, 
there  will  be  an  honest  difference  of  opinion  as  to  measures 
and  methods.  No  one  law  on  taxation  was  ever  faithfully 
executed  that  did  not  cause  friction  and  hardship  somewhere. 

Any  radical  or  abrupt  change  in  our  tax  laws  would  so 
disturb  our  business  arrangements  that  it  would  require  years 
to  adjust  our  relations  to  the  new  methods,  and  would  cause 
a  considerable  loss  to  capital  and  labor.  No  body  of  intelli- 


AGRICULTURAL  TOWNS.  123 

gent  men,  with  the  best  interests  of  the  State  at  heart, 
would  adopt  entirely  and  at  once  the  radical  changes  set 
forth  in  print  and  in  hearings  before  this  Commission  as 
being  desirable. 

Should  the  Commission  cover  the  entire  field  that  has  been 
opened  before  them  in  an  elaborate  report,  not  one  person 
in  a  hundred  having  the  opportunity  would  ever  read  it,  and 
of  those  who  did  some  would  do  so  only  to  find  food  for 
controversy,  others  to  find  their  judgment  confirmed ;  both 
would  still  bicker  for  their  unchanged  opinions.  The  world 
is  full  of  tax  literature.  It  is  stored  in  heaps  in  the  vaults 
of  the  State  House,  as  the  result  of  legislative  hearings. 
The  shelves  of  our  libraries  are  cumbered  with  large  and 
carefully  prepared  volumes  by  studious  experts  on  taxation. 
Yet  who  is  convinced?  Several  able  and  learned  commis- 
sions, appointed  under  the  authority  of  the  State,  have  given 
months  of  time  and  impartial  labor  to  the  solving  of  these 
problems,  and  how  little  has  been  accomplished.  All  •  in 
their  consternation  may  well  inquire  with  Esaias  the  prophet, 
"  Lord,  who  hath  believed  our  report?"  There  is  now  pub- 
lished, on  every  phase  of  the  tax  question,  "light"  enough 
to  convert  the  world.  This  much  we  have  learned  in  regard 
to  taxation  ;  like  the  babbling  brook,  — 

Schemes  may  come  and  schemes  may  go ; 
The  tax  goes  on  forever. 

The  commissioners,  appointed  under  the  resolve  "to  ob- 
tain, collate  and  report  facts  concerning  taxation,  present  a 
summary  of  conclusions  to  be  drawn  therefrom,  and  suggest 
any  changes  advisable  in  the  laws  of  the  Commonwealth 
relating  to  taxation,"  find  that,  as  a  rule,  in  the  matter 
of  taxation  the  farmers  of  Massachusetts  stand  to-day  just 
where  all  the  people  stood  at  the  beginning  of  the  govern- 
ment. They  believe  that  every  person  should  pay  his  just 
proportion  for  the  benefit  he  receives,  according  as  he  has 
been  prospered  in  his  business  or  his  profession. 


124  TAXATION  REPORT. 

Highways  and  Abandoned  Farms. 

In  the  beginning  nearly  every  household  had  its  spinning- 
wheel  and  loom,  while  every  hamlet  had  its  grist  and  saw 
mill  for  the  accommodation  of  the  immediate  neighborhood. 
As  the  settlements  expanded,  the  hill-tops  were  occupied  by 
the  farmers,  roads  were  built  by  them  at  their  own  expense 
direct  from  one  to  the  other,  regardless  of  hill  or  dale,  and 
with  special  reference  to  attendance  at  church  and  school. 
The  stage  coach  appeared  on  the  scene,  connecting  the 
larger  villages,  and  soon  after  making  through  trips  from 
Boston  to  the  large  settlements  in  other  States.  The  hand 
wheel  and  loom  were  forced  away  to  the  attic,  as  the 
home  product  gave  way  to  the  small  village  factory,  where 
the  farmers  exchanged  their  wool  and  flax  for  manufactured 
cloth.  Weekly  trips  to  Boston  from  across  the  State  with 
teams  laden  with  farm  products,  and  a  return  with  supplies 
of  dry  goods,  groceries  and  hardware,  proved  a  paying  busi- 
ness. Soon  better  lines  of  travel  along  the  valleys  were 
demanded.  The  farmers  on  the  hills  protested  against  being 
thus  isolated,  and  taxed  to  pay  for  the  new  roads  which  were 
to  prove  their  ruin.  Nevertheless,  the  new  roads  were  built ; 
a  neglected  way  much  out  of  repair  marks  the  former  line 
of  travel,  through  gates  and  bars  that  obstruct  the  lane,  to 
the  farm-house  on  the  hill-top  at  the  end  of  the  road.  Still 
farming  in  Massachusetts  paid,  and  the  farmers  were  pros- 
perous because  they  had  the  benefit  of  a  home  market  in  the 
growing  manufacturing  villages  that  were  springing  up  here 
and  there  throughout  the  State. 

As  time  wore  on  capital  increased  in  the  cities,  money 
sought  investment.  Avenues  of  trade  were  demanded  with 
the  outside  world.  The  Boston  &  Albany  Railroad  was 
built,  first  securing  the  bonds  of  the  State  to  the  extent 
of  several  millions  to  aid  the  enterprise.  Then  came  the 
Hoosac  Tunnel  and  the  New  York  &  New  England  enter- 
prises, wherein  untold  millions  were  sunk  by  the  State  to 
get  through  lines  of  trade  with  the  west  and  south.  While 


HIGHWAYS.  125 

the  farms  of  the  State  were  being  excessively  taxed  to  for- 
ward these  enterprises  for  the  benefit  of  Boston,  Boston 
capital  was  seeking  other  worlds  to  conquer  by  aiding  un- 
certain railroad  enterprises,  west  and  south,  and  by  placing 
millions  in  western  farm  mortgages,  many  of  which  proved 
to  be  of  the  wild-cat  order. 

These  railroads,  fitted  for  first-class  transportation  and 
traffic  from  abroad,  hardly  pay  that  attention  to  local  trans- 
portation in  this  State  which  the  outlay  by  the  State  would 
seem  to  warrant.  Through  freights  from  the  west  come  in 
excellent  refrigerator  cars  from  Chicago  to  Boston  and  vice 
versa  at  little  more  expense  than  ordinary  mixed  freights 
from  western  Massachusetts  to  Boston  or  return.  Then 
again,  farmers  found  that  with  the  new  lines  of  railroad  the 
public  were  demanding  new  lines  of  road  across  the  country 
to  meet  them,  thus  isolating  other  farms.  Where  manu- 
facturing had  sprung  up  on  the  numerous  streams  in  the 
State  away  from  railroad  lines,  it  was  nearly  all  abandoned 
because  of  the  extra  cost  of  transportation  over  our  mountain 
roads  to  the  railroad  stations.  These  new  roads  caused  other 
farms  to  be  isolated,  as  described  above,  and  as  in  the  former 
case,  these  also  were  soon  abandoned.  These  new  roads  have 
many  times  run  through  low  wet  lands  or  along  steep  river 
banks  where  farms  or  houses  could  not  be  located,  and  as 
these  long  uninhabited  stretches  were  not  well  supervised, 
opportunity  was  afforded  for  people,  sometimes  rightfully 
but  oftener  wrongfully,  to  inflict  an  unjust  penalty  upon  a 
town.  The  courts,  through  misapplied  sympathy  for  injuries 
never  sustained,  doomed  the  towns  to  pay  exorbitant  dam- 
ages. When  some  great  flood  or  other  calamity  has  devastated 
a  town,  the  Legislature  has  justly  stepped  in  and  appropri- 
ated large  sums  of  money,  to  repair  the  damage  ;  but  when 
the  mountain  roads  of  many  a  smaller  town  have  been  torn 
and  destroyed  by  cloud  bursts  and  mountain  torrents,  having 
no  friend  at  court,  they  have  quietly  repaired  their  damage 
at  a  rate  per  cent,  no  higher  than  would  have  been  necessary 
for  the  more  favored  town  to  have  repaired  all  its  damage. 


126  TAXATION   REPORT. 

Some  towns  having  these  large  road  debts  entailed  upon  them 
have  sought  relief  in  State  roads,  which  were  hailed  with 
delight  as  being  for  the  especial  relief  of  the  poorer  and 
overtaxed  towns;  while  in  fact,  through,  as  they  believe, 
wrong  interpretations  of  the  contract  and  unjust  decisions, 
thousands  of  dollars  have  been  added  to  a  debt  that  was 
already  up  to  the  limit  allowed  by  law  of  five  per  cent,  on 
their  valuation,  over-estimated  as  it  is. 

To  sum  up  the  highway  situation,  it  may  be  said  that 
changes  in  industrial  conditions  have  compelled  the  construc- 
tion of  new  lines  of  communication,  both  railways  and  high- 
ways, for  which  the  farmer  in  large  part  paid  the  bills,  but 
which,  far  from  proving  a  benefit  to  him,  left  his  farm  stranded 
on  the  hill-top,  forced  its  abandonment,  opened  the  way  for 
the  steady  stream  of  emigration  flowing  from  the  country  to 
the  city,  and,  last  but  not  least,  brought  new  competitors  to 
monopolize  the  markets  which  he  formerly  controlled.  The 
owners  of  these  stranded  farms,  having  first  been  taxed  to 
build  the  road  that  ruined  them,  soon  took  the  cars  with  their 
families  and  sought  relief  in  the  city  or  in  the  western  world, 
leaving  the  farms  they  could  not  sell  to  the  tender  mercies 
of  the  assessor  and  tax  collector.  While  the  State  has  pro- 
vided for  all  others,  she  has  denied  the  faith  of  her  farmers 
in  not  providing  these  things  for  her  own  household. 

Overvaluation  of  Farms. 
In  looking  over  the  valuation  of  these  abandoned  lands  of 

o 

one  of  the  hill  towns  in  western  Massachusetts,  there  were  14 
sales  within  the  last  few  months,  comprising  1,323  acres,  at 
an  average  price  of  $2.56  per  acre.  The  average  assessed 
valuation  of  these  same  lands  on  the  assessors'  books  was 
$6.01  per  acre.  The  tax  rate  of  the  present  year  was  $18 
per  $1,000.  Taking  these  14  sales  as  an  actual  cash  basis  on 
which  to  place  a  valuation,  the  tax  rate  would  be  $42.25  on 
the  $1,000.  These  figures  may  be  regarded  as  represent- 
ing the  average  condition  of  many  of  our  towns  located 
away  from  railroad  communication.  They  are  simply  aban- 


OVERVALUATION   OF  FARMS. 


127 


doned  lands,  many  acres  being  well  covered  with  wood  and 
timber,  some  excellent  pasture,  and  in  no  sense  "worn-out 
lands."* 

Schools. 

The  same  causes  which  have  taken  away  the  roads  and  driven 
out  the  inhabitants  have  by  a  similar  process  taken  away  the 
schools  with  like  results.  The  cities,  looking  to  the  hills 
whence  their  strength  cometh,  have  places  for  all  the  bright, 
active  graduates  of  the  high  schools  of  the  country  towns, 
either  as  teachers,  clerks  or  in  other  positions  of  responsi- 
bility, until  in  many  towns  there  is  not  a  graduate  left.  The 
"kind  return"  given  for  these,  the  best  the  town  affords, 
are  the  waifs  from  the  city  missions,  the  abandoned  children 
of  the  drunkard  and  criminal  classes,  street  gamins  and  the 
various  other  pauper  classes,  with  all  the  attending  diseases 
of  body  and  mind.  The  State  wards  pay  to  the  towns  fifty 
cents  per  week  for  their  schooling,  but  the  mission  children 
go  free.  The  law  should  be  amended,  so  that  both  classes 
be  paid  for  alike.  These  city  children  are  placed  in  the 
country  families  and  schools  by  scores  to  be  re-created, 
taught  habits  of  industry,  and,  if  possible,  reared  to  respect- 
able manhood  and  womanhood.  It  is  an  open  question 
whether,  while  the  city  child  is  being  elevated  to  a  higher 

*  Table  showing  the   Valuation  per  Acre  of  Farming  Land  in  a  Hill  Town,   as 
compared  with  the  Selling  Price  of  the  Same  Land. 


Number  of 
Acres. 

Valuation  per 
Acre. 

Selling  Price 
per  Acre. 

Number  of 
Acres. 

Valuation  per 
Acre. 

Selling  Price 
per  Acre. 

50 

$3  00 

$1  00 

100 

$6  00 

$2  00 

150 

6  00 

2  67 

150 

6  67 

4  00 

80 

5  00 

2  22 

120 

4  00 

2  00 

65 

10  00 

2  58 

25 

9  00 

2  00 

300 

5  00 

2  75 

88 

10  00 

2  75 

25 

6  00 

2  50 

50 

6  00 

2  00 

60 

6  00 

2  25 

60 

6  00 

2  40 

Average  valuation  per  acre,  $6.01 ;  average  selling  price  per  acre,  $2.56. 


These  figures  include  one-eighth  of  the  total  acreage  comprised  in  the  valuation 
of  the  town.  More  than  one-third  of  the  total  acreage  of  the  town  is  owned  by 
non-residents. 


128  TAXATION   REPORT. 


: 


plane,  the  contamination  does  not  sink  the  country  child 
a  correspondingly  low  level. 

Having  entered  somewhat  at  length  upon  the  recital  of 
causes  under  the  head  of  highways  that  have  led  to  the 
depopulation  and  the  decline  in  value  of  the  lands  of  the 
farming  or  hill  towns,  it  is  well-nigh  a  repetition  of  the  same 
causes  to  show  that,  after  the  roads  are  taken  away  and  the 
population  dispersed,  the  school-house  is  removed  to  another 
centre  of  population  covering  a  much  larger  field,  thus 
requiring  a  walk  or  transportation  of  the  children  from  these 
isolated  farms  two  or  three  miles  along  a  lonely  and  tramp- 
infested  road  to  the  nearest  school-house,  and  not  infre- 
quently into  another  town.  No  wonder  the  last  remaining 
families  in  that  neighborhood  keep  their  children  at  home  or 
else  abandon  the  entire  section,  as  may  be  seen  in  many  a 
town  whereat  least  one-third  of  their  former  populous  streets 
have  not  a  house  left  upon  them,  and  two-thirds  of  their 
entire  population  is  gone.  Meanwhile,  more  weeks  of  school- 
ing were  demanded  and  better  wages  for  teachers.  Under 
certain  conditions  the  State  would  help  the  poorer  towns, 
but  in  no  case  could  the  amount  raised  by  the  town  be 
lessened,  — an  increasing  burden,  since  the  valuation  of  such 
town  was  constantly  decreasing. 

One  of  the  safeguards  to  a  farmer  is  a  well-trained  dog, 
not  only  to  kill  and  drive  away  noxious  animals  that  are  so 
destructive  to  the  crops  and  poultry,  but  as  a  thorough  pro- 
tection to  the  household  against  tramps,  not  allowing  one 
even  to  enter  the  dwelling,  but  in  many  cases  accompanying 
women  and  children  in  their  walks  and  affording  them  every 
protection.  But  even  the  farmer's  dog,  his  best  protector, 
has  an  annual  price  placed  upon  his  head  above  that  of  his 
horse  or  ox,  to  insure  protection  against  the  spoliations  of 
the  sportsman's  thoroughbred  ;  and  all  surplus  must  go  to 
prolong  the  village  school  or  add  new  volumes  to  the  village 
library.  Even  the  farmer's  hens  beyond  a  limited  number 
must  pay  tribute. 


INSTITUTIONS.  129 

Less  Extravagant  Institutions. 

High  license  to  sell  liquor  is  questionable  business ;  and 
is  it  not  also  a  crime  against  society  to  pile  up  bricks,  mor- 
tar, and  granite  in  palatial  residences  at  an  expense  of  several 
thousand  dollars  to  cover  each  lunatic,  criminal  and  pauper 
created  by  the  accursed  traffic,  then  call  upon  the  thousands 
of  small  tax  payers  in  the  State,  whose  residences,  covering 
an  average  household  of  five  persons,  will  not  bring  $1,000 
in  the  open  market,  and  many  others,  including  scores  of 
acres  of  land,  will  not  bring  $500?  A  change  here  is  clearly 
advisable.  Build  only  for  strength  and  comfort  suitable  to 
the  needs  of  the  classes  to  be  cared  for.  The  State  will  soon 
require  more  public  buildings  to  accommodate  her  increas- 
ing wards.  Those  not  criminally  wayward,  old  and  young, 
might  easily  be  colonized  upon  some  of  the  cheap  farms  offered 
in  the  market,  in  healthy  localities ;  or  even  a  whole  town- 
ship might  be  bought,  with  all  needed  improvements,  schools 
and  churches  included,  at  one-half  to  one-fourth  the  cost  per 
capita  to  the  State  that  her  institutions  for  such  purposes 
have  cost  in  the  past.  Under  wise  regulations  the  older 
children  might  be  self-supporting  on  the  farm,  and  still  get  a 
sufficient  amount  of  schooling  to  make  them  honored  and  use- 
ful citizens.  In  the  cultivation  of  small  fruits  the  younger 
children  might  be  made  helpful,  and  with  proper  treatment 
this  class  of  population  might  cause  these  abandoned  places 
to  become  fruitful.  They  would  become  attached  to  the  call- 
ing of  agriculture,  an  advantage  not  only  to  themselves  but 
to  the  old  Commonwealth. 

Are  not  the  farmers  of  the  State  somewhat  responsible  for 
the  condition  they  are  in,  by  constantly  ignoring  their  own 
claims  to  representation  in  the  Legislature,  when  scarcely 
one  in  two  thousand  of  their  number  is  elected  in  any  year* 
and  these  seldom  but  once  in  a  lifetime,  while  men  from  other 
callings  and  professions,  for  whom  the  farmers  cheerfully 
vote,  are  represented  by  more  than  one  in  every  two  hundred, 
continued  in  office  year  after  year?  The  farmers  should  not 
come  as  fawning,  cringing  suppliants,  seeking  alms ;  they 


130  TAXATION  REPOET. 

have  a  right  to  call  with  no  uncertain  sound  that  the  State 
shall  be  just  before  it  is  generous,  and  shall  pursue  the  same 
liberal  policy  towards  the  farmers  and  farming  towns  that  it 
has  pursued  towards  labor,  capital  and  the  centres  of  popu- 
lation. 

Advantages  and  Neglected  Resources. 

Restored  means  of  transportation,  agriculture,  horticulture 
and  pomology  or  fruit  culture  would  permanently  benefit 
farm  and  city  alike.  Add  to  this  the  opportunity  afforded 
for  the  inhabitant  of  a  city,  at  little  cost,  to  find  rest  and 
recreation,  with  results  as  seen  in  the  statement  below. 

The  following  statistics  are  taken  from  the  records  of  a 
hill  town,  and  give  every  death  which  has  occurred  for 
twenty  years,  from  the  year  1871  to  1890,  inclusive.  Out 
of  a  population  of  between  300  and  400  there  were  during 
twenty  years  only  110  deaths  ;  of  these,  10  were  under  nine 
years  old,  4  between  ten  and  twenty  years  old,  7  between 
twenty  and  thirty  years  old,  6  between  thirty  and  forty  years 
old,  4  between  forty  and  fifty  years  old,  10  between  fifty  and 
sixty  years  old,  12  between  sixty  and  seventy  years  old,  25 
between  seventy  and  eighty  years  old,  25  between  eighty  and 
ninety  years  old,  6  between  ninety  and  ninety-six  years  old, 
and  1  at  the  age  of  ninety-nine  years;  so  that,  out  of  110 
deaths,  there  were  but  31  under  the  age  of  fifty  years,  and 
57,  or  more  than  one-half,  passed  the  limit  of  threescore 
years  and  ten,  dying  when  between  seventy  and  ninety-nine 
years  of  age.  The  average  age  of  all  who  died  in  this  town 
during  the  twenty  years  was  sixty  years  and  four  months, 
which  is  about  twice  the  average  of  persons  who  died  in  the 
city  of  Boston ;  and,  if  10  children  under  nine  years  of  age 
be  deducted  from  the  account,  the  average  of  life  for  the 
remaining  100  is  sixty-six  years,  four  months  and  nine  days. 
The  deaths  in  the  town  have  not  averaged  6  per  year  for  the 
twenty  years ;  sometimes  there  have  been  only  3  deaths  in 
a  year.  In  1875  there  were  7  deaths,  the  youngest  being 
seventy  years  old  and  the  oldest  ninety-three.  In  1876  there 
were  6  deaths,  the  youngest  being  sixty-eight  years  of  age 


ADMINISTRATION  OF  JUSTICE.  131 

and  the  oldest  ninety-one.  In  1877  there  were  9  deaths,  and 
6  of  them  were  between  seventy-seven  and  ninety- four  years 
of  age.  In  1878  there  were  10  deaths,  the  youngest  being 
thirty-seven  and  the  next  fifty-six,  and  the  others  ranging 
from  seventy-one  to  ninety-nine  years  old.  In  1888  there 
were  6  deaths  between  the  ages  of  fifty  and  eighty-one.  In 
1890  there  were  only  4  deaths,  all  between  the  ages  of  sixty- 
eight  and  seventy-two. 

It  is  said  of  some  Europeans  who  came  early  to  our  shores 
that  they  brought  upon  themselves  early  decay  and  premature 
death  by  plunging  into  all  waters,  however  muddy  or  pol- 
luted, thinking  somewhere  to  find  a  pool  that  would  restore 
them  to  perpetual  youth.  Nor  have  they  learned  through 
four  hundred  years'  experience  in  premature  death  and  de- 
cay in  the  city  to  look  to  the  hills  for  the  healing  balm  that 
proves  to  be  the  elixir  of  life.  They  go,  to  Europe  at  an 
expense  of  thousands  of  dollars,  and  live  there  for  months 
and  years,  because  it  is  cheaper  if  not  more  healthy  than 
living  in  Boston  or  New  York.  Sentiment  aside,  Europe 
affords  no  finer  views  of  landscape  or  more  health-giving 
atmosphere  than  do  the  hills  of  Massachusetts  at  a  mini- 
mum of  cost. 

Administration  of  Justice. 

There  is  in  western  Massachusetts  a  section  of  ten  or 
twelve  towns  within  a  radius  of  eighteen  to  twenty  miles, 
without  railroad  communication,  that  have  received  "  knock- 
out drops"  from  legislation  disqualifying  justices  of  the 
peace  to  act,  until  there  is  no  officer  authorized  to  issue 
warrants  for  arrests,  nor  courts  held  within  their  limits ; 
and,  although  there  is  seldom  an  outbreak,  should  an  emer- 
gency arise,  either  the  people  would  be  compelled  to  resort 
to  lynch  law,  or  else  the  culprit  would  be  in  Boston,  New 
York  or  Canada  long  before  the  cumbersome  machinery  of 
the  law  could  be  made  effective  and  brought  to  bear.  Of 
late,  somewhat  has  been  said  and  written  of  the  "  hoodlum 
element"  in  country  districts.  A  town  votes  license  ;  a  man 
pays  $1,000  to  secure  it;  in  order  to  make  both  ends  meet, 


132  TAXATION  REPORT. 

the  licensee  sells  to  all  who  will  buy,  regardless  of  conse- 
quences ;  the  young  are  enticed,  or  inclination  leads  them  to 
drink,  until  their  souls  are  set  on  fire  of  hell,  when  there  is  no 
black  crime  in  all  the  catalogue  of  infamy  they  will  not  per- 
petrate, —  crime  beside  which  an  unblushing  murderer  would 
crimson  at  its  mention,  —  causing  both  the  family  of  the 
murderer  and  of  the  murdered  a  sorrow  that  death  alone  can 
heal.  The  town  and  State  in  partnership  get  the  $1,000; 
the  tax  payers  refund  the  $10,000,  more  or  less,  it  costs  to 
convict  and  hang  the  criminal,  if  indeed  he  does  not  in  the 
end  escape  a  just  punishment. 

The  farming  towns  seldom  paid  more  than  $4  or  $5  on 
$1,000  in  taxes,  and  this  uncomplainingly,  until  the  excessive 
outlay  demanded  by  the  cities  brought  the  rate  up  to  more 
than  four  times  that  amount.  They  have  a  well-grounded 
faith  to  believe  that,  should  all  property  pay  its  just  propor- 
tion, taxation  would  cease  to  be  a  burden. 

But,  as  the  hiding  away  of  the  goodly  Babylonish  garment, 
the  wedge  of  gold  and  the  shekels  of  silver  in  the  midst  of 
the  tent  well-nigh  proved  the  destruction  of  the  camp  of 
Israel,  so  the  present  escapes  of  personal  property,  if  not 
in  some  way  checked,  will  soon  cause  disaster  and  disgrace 
to  rest  upon  the  fair  name  of  Massachusetts. 

Recommendations . 

With  many  there  is  hope  in  a  succession  or  inheritance 
tax ;  death  being  an  honest  hour,  then  will  the  tax  gatherer 
secure  the  dues  of  all  those  large  personal  estates  that  have 
escaped  during  the  life  of  the  holder ;  but  even  this  is  a 
mooted  question,  many  affecting  to  believe  the  good  results 
will  never  be  realized  until  the  sea  gives  up  its  dead.  Nev- 
ertheless, we  suggest  its  trial,  and  if  this  fail,  we  would  com- 
pel every  person  to  show  to  the  assessor  what  property  he 
has,  as  fully  as  the  farmer's  stock  of  cattle  and  crops  are 
shown  in  his  barns  and  upon  his  thousand  hills,  and  it  is  but 
right  that  they  should. 

Some  think  it  robbery  to  be  compelled  to  pay  a  tax  for  the 
support  of  the  government ;  but  there  is  no  place  on  this 


RECOMMENDATIONS.  133 

broad  earth  where  men  get  so  many  good  returns  for  their 
money  expended  as  they  do  from  a  good  government  honestly 
administered,  — the  robbery  comes  in  not  supporting  it. 

The  foregoing  being  the  leading  features  of  an  active  life 
of  observation  of  more  than  half  a  century  among  the  farmers, 
it  is  presented  as  a  plain  statement  of  important  and  highly 
significant  facts  concerning  a  large  and  honorable  portion  of 
our  population.  The  development  of  our  civilization  has 
been  in  some  serious  respects  at  their  cost  and  not  to  their 
benefit.  The  prosperous  farms  of  many  hill  towns  have 
been  abandoned  because  the  struggle  of  life  nas  been  too 
hard.  An  excessive  proportion  of  taxes  has  been  borne  by 
the  people  whose  all  has  been  visible  to  the  assessors,  while 
the  holders  of  personal  property  have  been  able  to  conceal 
hundreds  of  millions.  Relief  is  demanded  imperatively,  as 
a  matter  of  simple  justice.  It  is  enough  for  the  cities  that 
they  have  drained  the  towns  of  their  men  and  grown  at  their 
expense,  without  putting  upon  them  also  such  an  excessive 
proportion  of  taxes  that  life  becomes  intolerable. 

For  these  reasons  the  enactment  of  measures  to  distribute 
equally  the  burden  of  supporting  the  government  is  recom- 
mended to  the  Legislature,  to  the  end  that  these  isolated 
farming  towns  may  be  given  their  just  dues  in  better  schools, 
better  means  of  communication  with  the  outside  world,  and 
that  the  paupers  and  insane  classes  be  provided  for  without 
unjust  local  taxation. 

No  other  members  of  this  Board  are  held  responsible  for 
the  opinions  herein  expressed. 

The  haste  with  which  the  report  has  been  closed,  in  order 
to  meet  the  demands  of  the  act  creating  and  regulating  our 
action,  precludes  the  possibility  of  fully  considering  every 
conclusion  reached.  Yet,  while  hesitating  to  approve  all  its 
parts  without  mental  reservation,  there  is  no  desire  to  dis- 
turb the  closing  hours  of  our  hitherto  pleasant  relations  by 
antagonizing  any  portion  of  the  report. 

Respectfully  submitted, 

ALVAN  BARRUS. 


MINORITY  REPORT. 


To  His  Excellency  ROGEK  WOLCOTT,  Governor,  and  the  Honorable  Ex- 
ecutive Council. 

In  compliance  with  the  duty  assigned  me  as  one  of  the 
commission  authorized  to  < '  inquire  into  the  expediency  of 
revising  and  amending  the  laws  of  the  State  relative  to  taxa- 
tion," I  herewith  submit  my  report,  setting  forth  the  reasons 
of  my  dissent  from  the  report  of  my  colleagues,  together 
with  a  statement  of  conclusions  reached  by  me,  from  such 
facts  as  have  been  available,  and  suggestions  of  such  changes 
in  the  laws  of  the  Commonwealth  relative  to  taxation  as  have 
commended  themselves  to  my  judgment. 

Conceding  that  the  opinions  of  the  majority  of  the  com- 
mission deserve,  and  should  receive,  the  most  careful  con- 
sideration of  the  General  Court  and  the  citizens  of  the 
Commonwealth,  and  that  every  honorable  effort  should  be 
made  by  the  commissioners  to  reach  an  agreement,  the  signer 
of  this  report,  after  listening  to  the  arguments  advanced  in 
favor  of  their  propositions,  was  compelled  by  his  conviction 
of  duty  to  dissent  from  their  opinions  and  recommendations, 
to  ask  a  fair  hearing  for  such  arguments  as  may  be  adduced 
in  defence  of  his  position,  and  to  request  a  careful  review  of 
the  considerations  that  have  led  him  to  submit  recommenda- 
tions in  line  with  the  ancient  policy  of  the  Commonwealth. 

Recognizing  the  responsibility  resting  upon  me,  not  only 
as  a  member  of  the  commission  but  as  one  compelled  to  dis- 
sent from  the  report  of  the  majority,  I  have  attempted,  ac- 
cording to  my  opportunities  and  ability,  to  present  such  facts 
and  deductions  therefrom  as  my  judgment  warrants. 

Information  has  been  sought  from  citizens  well  informed 
upon  questions  of  taxation,  and  I  wish  to  acknowledge  my 


136  TAXATION   REPORT. 

obligations  to  all  who  have  thus  contributed,  and  especially 
to  the  Hon.  Henry  Winn  of  Maiden  for  the  use  of  his  exten- 
sive collection  of  taxation  literature  and  for  his  aid  and 
counsel. 

INTERPRETATION  or  THE  RESOLVE. 

On  April  28,  1896,  the  committee  on  taxation  reported  to 
the  Senate  the  following  resolve  :  — 

RESOLVE  TO  AUTHORIZE  THE  APPOINTMENT  OF  A  COMMISSION  TO 
INQUIRE  INTO  THE  EXPEDIENCY  OF  REVISING  AND  AMENDING 
THE  LAWS  OF  THE  STATE  RELATIVE  TO  TAXATION. 

Resolved,  That  the  governor,  by  and  with  the  consent  of  the 
council,  appoint  a  commission  of  five  able,  discreet  persons,  to 
inquire  into  the  expediency  of  revising  the  laws  of  the  state  rela- 
tive to  taxation.  They  shall  have  authority  to  employ  assistants, 
send  for  persons  and  papers,  and  shall  receive  such  compensation 
as  the  governor  and  council  shall  determine.  They  shall  make 
and  present  their  final  report  to  the  governor  of  the  Commonwealth 
not  later  than  October  first,  eighteen  hundred  and  ninety-seven. 
Two  thousand  copies  of  said  report  shall  be  printed,  one  copy 
shall  be  sent  to  each  member-elect  of  the  general  court  of  eighteen 
hundred  and  ninety-eight,  and  the  balance  shall  be  distributed  in 
such  manner  as  the  commissioners  shall  determine. 

This  resolve  was  defeated,  and  a  motion  to  reconsider  the 
vote  by  which  it  was  defeated  was  laid  on  the  table.  The 
vote  whereby  the  resolve  was  defeated  was  afterwards  recon- 
sidered, and  the  resolve  was  amended  and  passed  in  its  pres- 
ent form. 

See  page  in.  By  reference  to  the  resolve  as  given  in  the  introduction 
to  the  majority  report,  it  wrill  be  seen  that  the  words  "  in- 
quire into  the  expediency  of  revising  the  laws  of  the  State 
relative  to  taxation"  were  stricken  out,  and  the  following 
words  were  inserted:  "  to  obtain,  collate  and  report  facts 
concerning  taxation,  present  a  summary  of  conclusions  to  be 
drawn  therefrom,  and  suggest  any  changes  advisable  in  the 
laws  of  the  Commonwealth  relating  to  taxation." 


GENERAL   REMARKS.  137 

The  claim  of  the  majority,  that  the  principle  of  appoint-  see  page  i. 
ment  of  the   commission   indicates  that  it  was   created  to 
consider  only  the  "broad  features"  of  existing  legislation, 
does  not  seem  to  be  warranted. 

The  commission  was  not  selected  from  the  list  of  well- 
known  tax  theorists  or  experts,  but  from  men  in  the  different 
walks  of  life.  The  resolve  gave  authority  to  the  commission 
for  the  appointment  of  such  assistants  as  the  commission 
should  deem  necessary  to  perform  its  work. 

It  is  the  opinion  of  the  undersigned  that  the  spirit  and 
letter  of  the  law  should  have  been  fulfilled,  and  that  the  com- 
mission should  have  proceeded  to  obtain  facts  concerning 
taxation,  not  only  in  this  but  in  other  States  and  countries, 
so  that,  by  a  careful  comparison  of  the  different  experiences, 
and  by  the  presentation  of  tables  showing  the  probable  re- 
sults of  the  several  plans  proposed  before  the  commission, 
just  conclusions  could  be  reached. 

No  attempt  was  made  to  investigate  proposition  number  See  page  78. 
one,  which  reads  as  follows  :  "  to  tax  such  property  [securi- 
ties] more  carefully  and  more  strenuously  than  it  is  now 
taxed.  To  accomplish  this,  a  system  of  State  supervision 
has  been  proposed.  The  appointment  of  State  assessors  has 
been  suggested,  who  shall  act  jointly  with  the  local  assessors, 
aiding  and  controlling  their  assessments  and  preventing  the 
evasion  of  taxes  by  changes  of  domicile.  A  uniform  State 
rate  of  taxation  on  such  property  has  also  been  proposed." 

If,  as  the  majority  say,  and  as  I  agree,  "it  was  impos- 
sible, within  the  specified  time  and  with  the  means  provided 
by  the  laws  creating  this  commission,  to  ascertain  all  the 
facts  which  it  would  be  desirable  to  have  in  discussing  the 
taxation  of  personalty,"  then  the  General  Court  in  session 
should  have  been  petitioned  (as  was  suggested  by  the  minor- 
ity) to  extend  the  time  and  to  appropriate  the  funds  neces- 
sary for  the  work,  that  the  General  Court  and  the  citizens 
might  have  the  facts  before  them,  and  judge  for  themselves 
whether  the  conclusions  reached  were  justified  by  the  facts. 
Up  to  the  time  of  the  appointment  of  the  undersigned, 
February,  1897,  the  time  of  the  commission  had  been  occu- 


138  TAXATION  REPORT. 

pied  in  giving  hearings  to  such  citizens  as  presented  them- 
selves. These  public  hearings  were  continued,  and  every 
one  who  applied  was  given  an  opportunity  to  be  heard. 

Those  who  appeared  in  the  interests  of  the  exemption  of 
personalty,  in  part  or  in  whole,  were  agreed  that  there  was 
a  considerable,  indeed,  a  large,  number  of  very  wealthy  men 
who  would  not  pay  any  tax  on  personal  property  if  there 
was  any  way  of  escape ;  that  evasion,  falsification,  bribery 
and  intimidation  were  sometimes  resorted  to ;  that  wealthy 
men,  who  lived  part  of  the  year  in  the  cities,  changed  their 
domicile  in  order  that  they  might  escape  taxation.  These 
wealthy  citizens  took  their  residence  in  towns  where  the  tax 
rate  was  notoriously  low,  and  where  the  assessors  winked  at 
the  evasion  of  the  law.  Their  love  of  home  was  in  direct 
proportion  to  their  exemption  from  bearing  their  share  in 
See  page  58.  the  expenses  of  government.  The  majority  say:  "From 
the  testimony  which  assessors  have  given  before  us,  there 
is  grave  suspicion  that  sometimes  sworn  statements  are 
falsely  made,  and  that  perjury  is  thus  committed  for  the 
sake  of  evading  or  reducing  taxation."  The  commission 
were  informed  that  in  some  instances  men  were  self-banished 
from  the  State,  preferring  exile  to  the  payment  of  their 
share  of  the  expenses  of  government. 

The  advocates  of  the  exemption  of  personalty  from  taxa- 
tion laid  great  stress  upon  the  wrong  committed  against 
these  self-exiles,  but  not  a  word  of  reproof  was  uttered 
against  such  unpatriotic  and  selfish  conduct,  nor  was  any 
effort  made  to  show  the  extent  of  the  burden  of  the  tax  on 
personalty,  as  affecting  these  wealthy  citizens,  or  as  affect- 
ing the  industry  or  enterprise  of  the  State. 

It  Avould  seem  to  be  fair  and  just  to  the  other  tax  payers 
that  we  should  insist  that  an  exhibit  of  the  burden  be  made, 
and  then  to  ask,  What  injustice  has  been  done  and  how 
much  has  industry  and  enterprise  been  restricted  within  the 
State  by  the  tax  on  personal  property,  tangible  and  in- 
tangible? How  much  has  the  State  been  retarded  in  its 
growth  and  best  developments?  and,  How  much  is  the 
non-tax-paying  millionaire  worth  to  the  State? 


GENERAL  REMARKS.  139 

It  is  claimed  that  our  manufacturers  have  for  some  years 
been  operating  their  plants  at  a  low  margin  of  profit ;  that 
our  farmers  and  wage  earners  have  received  but  a  very 
scanty  remuneration  for  their  labor ;  but  no  call  has  come 
from  the  manufacturers  or  the  laborers  for  any  exemption 
from  taxation.  The  farmers  of  the  hill  towns,  so  called, 
have  murmured  and  protested  against  the  hardship  of  their 
lot,  but  they  have  not  suggested  that  the  exemption  of 
tangible  or  intangible  personal  property  from  taxation  would 
relieve  them. 

I  am  not4n  favor  of  further  exemptions  but,  if  they  must 
be  made,  let  us  first  relieve  the  poor  of  the  poll  tax  ;  second, 
the  farmer  who  occupies  and  cultivates  his  own  farm  from 
all  tax  on  property  not  exceeding  $10,000 ;  the  machinery 
of  manufacturing  corporations  and  persons  engaged  in  man- 
ufacturing ;  the  stock  in  trade  of  our  merchants ;  and  all 
houses  of  not  exceeding  $5,000  in  value  owned  by  the 
occupier. 

The  way  to  reduce  the  tax  rate  without  increasing  the 
tax  valuation  is  to  secure  the  payment  of  the  tax  upon  the 
property  that  now  escapes.  It  is  generally  conceded  that 
the  amount  of  intangible  personalty  in  the  Commonwealth 
exceeds  even  the  amount  of  realty.  If,  then,  we  collect 
the  tax  on  the  intangible  personal  property,  the  tax  rate 
will  be  greatly  reduced,  and,  if  the  plan  proposed  in  this 
report  were  adopted,  I  believe  it  would  reduce  this  rate 
nearly  to  one-half  of  the  present  rate. 

Hon.  W.  B.  Durant  in  his  argument  before  the  commis- 
sion for  the  exemption  of  foreign  stocks,  stated  that  tens  of 
millions  of  dollars  had  gone  out  of  the  Commonwealth  of 
Massachusetts  because  of  the  existing  law,  and  related 
the  case  of  a  man  who  left  the  city  of  Cambridge  for  the 
State  of  Vermont.  He  adds:  "Almost  all  of  his  prop- 
erty was  in  a  corporation  organized  under  the  laws  of 
another  State."  "Are  you  not  afraid  of  the  Vermont 
doomage  laws?"  asked  Mr.  Durant.  "You  know  in  Ver- 
mont they  doom  a  man  double  or  treble  doomage,  and  the 
law  sounds  very  severe."  The  answer  was,  "No;  I  have 


TAXATION  EEPORT. 

seen  the  assessor.  He  is  a  clever  old  farmer,  and  he  will 
do  the  right  thing." 

What  would  Cambridge  have  gained  if  the  tax  on  foreign 
stocks  had  been  repealed  and  he  had  remained  there  ? 

Again,  Mr.  Durant  states  :  "  A  man  can  go  to  Vermont  with 
ten  millions  of  dollars  of  stock  invested  in  Chicago  dressed  beef 
concerns,  and  not  pay  a  cent."  It  might  have  been  well  for 
Mr.  Durant  to  have  added  that,  according  to  the  exhibit 
of  the  outrageous  spoliation  of  the  people  by  evasion  of 
Chicago's  wealthy  men,  probably  very  little  tax  was  paid 
in  Illinois  by  the  dressed  beef  concerns  ;  for  the  same  motive 
that  prompts  a  man  to  go  to  Vermont  to  escape  taxation  on 
his  stock  would  prompt  him  to  escape  taxation  in  Chicago. 

Mr.  Durant  claims  that  there  are  seven  hundred  million 
dollars,  in  value,  of  shares  of  foreign  corporations  held  in 
Massachusetts,  and  that  not  ten  per  cent,  of  that  amount  is 
taxed ;  and  then  he  says  that  men  whose  investments  are  in 
stocks  of  foreign  corporations  do  not  come  to  Massachusetts 
to  live  because  they  would  have  to  sacrifice  such  investments 
if  the  tax  were  enforced. 

Speaking  of  the  general  policy  of  the  Commonwealth,  he 
says :  "Just  so  sure  as  Massachusetts  does  not  avail  herself 
of  broad  principles,  her  trade  will  continue  to  leave  and  go 
to  New  York  or  elsewhere,  as  it  has  done  in  the  past."  And 
almost  immediately  after,  he  says  that  between  1880  and 
1890  the  increase  in  wealth  in  Massachusetts  was  6.8  per 
cent.,  while  in  New  York  it  was  6  per  cent. 

It  is  conceded  by  Mr.  Durant  and  others  who  come  before 
the  General  Court  for  exemption  of  stocks  or  bonds,  or  other 
intangible  property,  that  Massachusetts  is  suffering  from  a 
surplus  of  wealth ;  and,  as  they  claim  that  no  one  will  come 
here  with  wealth  because  of  our  tax  system,  it  must  follow 
that  the  wealth  was  originally  accumulated  here.  They  now 
ask  to  be  exempt  from  paying  back  to  the  mother  and  source 
of  their  fortune  the  moiety  of  their  surplus  which  is  due 
to  her  as  a  revenue  from  which  she  may  maintain  her  gov- 
ernment and  her  high  standard  of  civilization,  furnishing 
opportunities  out  of  which  every  man  may  be  lifted  from  the 


EXEMPTION  OF  FOREIGN   STOCKS.  141 

low  level  of  poverty  into  the  comforts  and  pleasures  of  life 
within  her  borders.  They  complain  there  is  no  opportunity 
for  investment  here.  As  far  as  it  has  come  to  my  knowl- 
edge, no  one  objects  to  foreign  investments  in  legitimate 
industry  and  enterprise.  If  other  States  and  Territories  are 
blessed  by  an  overflow  of  our  wealth,  and  such  wealth  can 
be  made  available  to  enlarge  the  prosperity  of  the  people, 
the  blessings  of  the  poor  will  rest  upon  those  who  thus 
assist  them ;  and  if,  indeed,  an  exodus  by  thousands  of  her 
tax-dodging  citizens  should  occur,  following  their  invest- 
ments in  person  and  building  for  themselves  communities 
where  the  ' '  clever  old  farmers  "  can  be  humbugged,  Massa- 
chusetts would  not  be  handicapped  in  her  enterprises.  With 


well  as  the  demand  for  more  of  those  things  wnicu  are  now 
termed  luxuries,  but  which  ought  to  be  and  will  be  a  part  of 
the  necessities  of  the  life  of  the  humblest. 

I  protest  that  the  present  tendency,  as  shown  in  the  de- 
mands for  exemption  from  taxation  of  those  who  have  the 
most  of  the  world's  wealth,  rests  upon  the  theory  that  the 
prosperity  of  the  State  is  in  direct  proportion  to  the  exalted 


140  TAXATION  REPORT. 

seen  the  assessor.  He  is  a  clever  old  farmer,  and  he  will 
do  the  right  thing." 

What  would  Cambridge  have  gained  if  the  tax  on  foreign 
stocks  had  been  repealed  and  he  had  remained  there  ? 

Again,  Mr.  Durant  states  :  ' « A  man  can  go  to  Vermont  with 
ten  millions  of  dollars  of  stock  invested  in  Chicago  dressed  beef 
concerns,  and  not  pay  a  cent."  It  might  have  been  well  for 
Mr.  Durant  to  have  added  that,  according  to  the  exhibit 
of  the  outrageous  spoliation  of  the  people  by  evasion  of 
Chicago's  wealthy  men,  probably  very  little  tax  was  paid 
in  Illinois  by  the  dressed  beef  concerns  ;  for  the  same  motive 
that  prompts  a  man  to  go  to  Vermont  to  escape  taxation  on 
his  stock  would  prompt  him  to  escape  taxation  in  Chicago. 


ERROR. 

On  page  140  (in  the  Minority  Report)  Mr.  Durant  is  quoted  as  follows:     "He 
says  that  between  1880  and  1890  the  increase  in  wealth  in  Massachusett 
per  cent  while  in  New  York  it  was  6  per  cent."  . 

What  Mr.  Durant  did  say  was  that  the  increase  in  wealth  in  New  \oi 
period  named  was  36  per  cent. 
(See  extract  front  Table  3,  page  ,<r,  Part  //,   •'  Wealth  Debt  and  Taxation"  Census  of  ,89o.} 

Comparative  Summary  of  the  true  Valuation  of  Real  and  Personal  Property, 
Total  and  Per  Capita,  by  States  and  Territories,  exclusive  bf  Alaska,  i* 


TOTAL. 

1890.  I88°- 


Massachusetts          .....  ^.803,645.447 

New  York  ......  8,576,701,991         -  6,308,000,000 


here  with  wealth  because  of  our  tax  system,  it  must  follow 
that  the  wealth  was  originally  accumulated  here.  They  now 
ask  to  be  exempt  from  paying  back  to  the  mother  and  source 
of  their  fortune  the  moiety  of  their  surplus  which  is  due 
to  her  as  a  revenue  from  which  she  may  maintain  her  gov- 
ernment and  her  high  standard  of  civilization,  furnishing 
opportunities  out  of  which  every  man  may  be  lifted  from  the 


EXEMPTION  OF  FOREIGN   STOCKS.  141 

low  level  of  poverty  into  the  comforts  and  pleasures  of  life 
within  her  borders.  They  complain  there  is  no  opportunity 
for  investment  here.  As  far  as  it  has  come  to  my  knowl- 
edge, no  one  objects  to  foreign  investments  in  legitimate 
industry  and  enterprise.  If  other  States  and  Territories  are 
blessed  by  an  overflow  of  our  wealth,  and  such  wealth  can 
be  made  available  to  enlarge  the  prosperity  of  the  people, 
the  blessings  of  the  poor  will  rest  upon  those  who  thus 
assist  them ;  and  if,  indeed,  an  exodus  by  thousands  of  her 
tax-dodging  citizens  should  occur,  following  their  invest- 
ments in  person  and  building  for  themselves  communities 
where  the  "clever  old  farmers"  can  be  humbugged,  Massa- 
chusetts would  not  be  handicapped  in  her  enterprises.  With 
all  respect  to  those  who  favor  exemption,  I  am  impressed 
that  they,  though  unwittingly,  have  forgotten  that  Massa- 
chusetts civilization  and  Massachusetts  prosperity  can  best 
be  advanced  not  by  exemption  of  the  wealthy  but  by  those 
measures  of  relief  and  remedy  that  will  inspire  the  humblest 
with  hope,  encourage  enterprise  and  disseminate  education 
and  enlightenment. 

The  competition  that  threatens  our  Commonwealth  is  not 
a  competition  between  States  as  to  which  shall  offer  the  best 
inducements  for  a  tax-dodging  constituency,  nor  a  competi- 
tion with  a  lower  civilization  ;  the  only  competition  that  she 
has  to  fear  is  from  such  States  as  shall  advance  most  on  the 
lines  in  which  she  so  long  has  led,  — the  State  that  affords  to 
all  her  citizens  the  best  economic  and  social  environment, 
and  furnishes  the  best  schools,  the  best  libraries,  the  largest 
opportunities  of  leisure  and  improvement.  As  civilization 
advances,  the  demand  will  be  for  more  art,  more  skill  and 
more  value  in  the  common  necessities  of  a  higher  life,  as 
well  as  the  demand  for  more  of  those  things  which  are  now 
termed  luxuries,  but  which  ought  to  be  and  will  be  a  part  of 
the  necessities  of  the  life  of  the  humblest. 

I  protest  that  the  present  tendency,  as  shown  in  the  de- 
mands for  exemption  from  taxation  of  those  who  have  the 
most  of  the  world's  wealth,  rests  upon  the  theory  that  the 
prosperity  of  the  State  is  in  direct  proportion  to  the  exalted 


142  TAXATION   REPORT. 

privileges  of  the  few.  All  over  the  country  farmers  and  the 
wage-workers  are  thinking  as  never  before.  The  question 
of  taxation  has  come  home  to  them.  The  New  York  Cen- 
tral Labor  Union  has  taken  active  measures  to  secure  some- 
thing of  justice  against  the  defrauders  of  the  State.  The 
Central  Labor  Union  of  Boston  has  a  standing  committee 
on  taxation.  In  England  and  on  the  continent  the  ques- 
tion of  taxation  is  attracting  attention.  It  is  well,  then,  that 
Massachusetts  should  stand  as  the  conserver  of  her  ancient 
rights  and  privileges,  and  should  insist  upon  a  system  of 
equal  taxation,  exempting  only  the  poor,  the  unfortunate, 
the  aged,  and  such  institutions  as  shall  best  advance  the 
interests  of  the  whole  people. 

TAXATION  OF  SECURITIES. 

After  enumerating  the  proposals  brought  before  the  com- 
mission, the  majority  proceed  to  consider  "  the  fundamental 
question,"  "  What  general  attitude  should  the  State  adopt 
towards  securities  which  represent  investments  outside  its 
limits  ?  "  concluding  with  the  presentation  of  a  plan,  not  as 
•  to  these,  but  for  "a  radical  change"  in  the  tax  system  of 
the  State  that  affects  all  securities  in  as  well  as  outside  the 
State.  This  radical  change  is  found  in  a  recommendation 
See  page  120.  for  the  "  abolition  of  the  present  taxes  on  intangible  person- 
alty, such  as  stocks,  bonds  and  securities,  loans  on  mort- 
gages, and  income." 

o    o       " 

This  seems  to  me  equivalent  to  saying  that  the  burden 
of  taxation  shall  rest  upon  the  manufacturer,  the  merchant, 
the  wage-earner,. the  man  of  small  salary,  and  the  farmer,  in 
order  that  the  Commonwealth  may  be  a  haven  of  rest  for 
those  who  invest  their  wealth  in  stocks,  bonds,  and  securi- 
ties, within  or  without  the  State. 

The  fact  that  the  majority  recommend  two  forms  of 
taxation  which,  in  their  opinion,  will  compensate  for  the 
loss  of  revenue,  viz.,  an  inheritance  tax  and  a  tax  on  house 
rentals,  does  not  militate  against  the  proposition  that  a  very 
large  part  of  the  taxable  property  of  the  Commonwealth 


TAXATION   OF   SECURITIES.  143 

is  to  be  exempted  from  taxation.  We  are  asked  to  give 
up  a  certain  source  of  revenue  from  living  men,  in  the  hope 
of  reaping  a  small  reward  after  their  death. 

The  main  argument  for  the  exemption  of  this  kind  of 
property  is  that  the  State  cannot  collect  the  tax,  or  that  the 
attempt  to  collect  leads  to  evasion  and  even  perjury  on  the 
part  of  our  most  wealthy  citizens.  Some  stress  is  laid  upon 
the  claim  that  such  a  tax  is  often  double  taxation. 

It  is  doubtless  the  duty  of  the  Commonwealth  to  protect 
its  citizens  against  undue  temptation  to  sin,  but  it  is  ques- 
tionable whether  such  sinners  should  be  annually  presented 
with  a  premium  for  living  among  us.  The  commission  also 
say  that  the  poll  tax,  except  when  laid  on  those  paying 
property  taxes,  is  generally  uncollectible.  Why  then  do 
they  not  recommend  the  abolition  of  the  poll  tax  ? 

Securities,  bonds,  stocks  and  the  like  are  not  only  evi- 
dences of  property,  but  they  are  property  to  all  intents  and 
purposes,  not  only  for  taxation,  but  for  the  purposes  of 
exchange  ;  not  merely  evidences  that  certain  property  exists, 
but  that  the  holder  cf  the  evidences  is  an  owner  in  the 
property  certified  to. 

The  citizen  who  conceals  in  his  safe  a  hundred  thousand 
dollars  in  intangible  property  is  not  morally,  and  should  not 
legally,  be  entitled  to  any  greater  consideration  than  the 
farmer,  whose  entire  wealth  of  five  thousand  dollars  is  visible 
to  the  eye  of  the  assessor.  To  exempt  the  shareholder  in 
the  foreign  corporations  or  holder  of  other  intangible  prop- 
erty from  his  annual  debt  to  the  State,  in  consideration  of 
the  fact  that  when  he  dies,  if  he  dies  in  the  State,  and  if  the 
property  is  to  be  found  within  the  State  when  he  dies,  and 
if  he  is  worth  sufficient  property  when  he  dies  to  render  his 
estate  taxable,  and  if  some  other  method  of  escape  has  not 
been  found,  then  the  State  may  reimburse  itself  in  a  small 
part  for  the  amount  due  from  the  deceased,  —  is  to  place  a 
premium  upon  the  removal  of  the  property  from  the  State 
prior  to  death,  and  a  penalty  upon  those  whose  capital  is 
invested  in  visible  enterprises,  — the  home  owner,  the  manu- 
facturer, the  merchant  and  the  farmer. 


144  TAXATION  EEPORT. 

If  it  is  wise  for  the  State  to  defer  the  collection  of  its  just 
dues  until  death  in  one  class  of  persons,  why  not  in  all 
classes?  Why  not  exempt  the  farmer,  the  home  owner, 
during  his  life,  and  then  collect  an  inheritance  tax  from  his 
estate  ?  The  invidious  distinction  to  be  made  in  the  interest 
of  a  class  should  be  sufficient  to  defeat  the  plan. 

The  tax  system  of  the  Commonwealth  was  originally  based 
on  the  theory  of  equity,  and  it  was  easily  enforced,  because 
of  the  universal  sense  of  moral  responsibility.  The  advan- 
tages of  government  were  appreciated  in  those  early  days  of 
our  simplicity.  The  theory  of  anarchy  had  not  entered  the 
heads  of  the  tax  reformers  of  that  day.  The  people  taxed 
themselves  through  their  government,  because  they  recog- 
nized their  responsibility  to  the  government.  The  tax  was 
levied  upon  the  people,  not  upon  the  property,  and  the 
people  were  taxed  not  because  they  possessed  property,  but 
because  the  possession  of  property  was  evidence  of  the  ability 
of  the  inhabitant  to  pay  his  share  of  the  expenditures  of  gov- 
ernment. From  each  according  to  his  ability,  measured  by 
his  property,  was  the  motto  of  the  tax  law. 

The  same  spirit  that  prompts  certain  of  the  most  wealthy 
of  our  citizens  to  evade  the  payment  of  taxes  is  the  same  that 
holds  them  aloof  from  participation  in  other  governmental 
responsibilities.  They  escape  the  higher  tax  of  the  city  by 
removing  their  domicile  to  some  tax-dodging  locality,  and 
by  this  act  lose  interest  and  pride  in  the  city ;  they  deaden 
their  sense  of  responsibility  to  the  government  and  to  the 
community.  They  are  sometimes  led  to  bribe  assessors,  or, 
failing  to  bribe,  they  seek  to  overawe  and  intimidate  them. 
It  is  the  opinion  of  the  undersigned  that  a  well-enforced 
system  of  taxation  upon  intangible  property  would  not  only 
make  better  citizens  out  of  those  who  now  evade  their  respon- 
sibilities, but  would  so  lessen  the  tax  rate  as  to  make  the  col- 
lection of  taxes  much  easier  than  at  present. 

Efforts  to  escape  responsibility  to  the  government  are  not 
confined  to  any  State  or  to  any  class  of  people.  The  scandal 
and  the  shame  of  tax-dodging  is  common  to  all  classes,  from 
the  man  who  evades  his  poll  tax,  to  the  millionaire  who 


TAXATION   OF   SECURITIES.  145 

removes  his  domicile  or  conceals  his  evidences  of  property. 

But,   as   the    majority  set   forth,    "The    larger  a   person's  Seepage 64. 

means  and  the  less  the  ties  of  business  or  profession,  the 

easier  it  is  to  select  a  domicile  at  will."     It  is  conceded  that 

the  principal  offenders  are  found  among  the  most  wealthy 

of  our  citizens.     The  example  thus  given  demoralizes  all 

classes  of  tax  payers  and  the  community  at  large. 

A  philosophical  anarchist  within  the  Commonwealth  re- 
fused to  pay  his  poll  tax,  not  because  he  wished  to  evade 
the  payment  of  the  small  sum  demanded,  but  because  he 
wished  to  make  a  protest  against  government.  Two  sisters, 
owning  real  estate,  refused  to  pay  their  tax,  on  the  principle 
that  they  were  denied  representation.  These  were  cour- 
ageous acts  of  persons  who  contested  for  conscience's  sake, 
and  the  community  was  not  demoralized  by  their  acts ;  but 
he  who  by  wilful  concealment  evades  his  tax,  is  not  only  not 
courageous,  but  he  is  a  law  breaker  with  malice  prepense. 
The  man  who  refused  to  pay  his  poll  tax  was  incarcerated 
for  his  refusal,  and  the  common  people,  unlearned  in  tax 
theories,  might  well  ask,  Why  should  .not  the  millionaire 
who  evades  his  tax  be  liable  to  as  severe  a  penalty  ? 

But  there  is  no  need  of  imprisonment  or  disfranchise- 
ment.  Those  who  hold  their  wealth  in  stocks  and  bonds 
can  be  made  to  show  their  financial  standing  as  easily  as  the 
poor  debtor  is  now  made  to  show  his  poverty.  The  poor 
debtor  and  the  rich  creditor  may  perjure  themselves,  but,  as 
there  is  a  penalty  for  that  offence,  few  will  run  the  risk  of 
discovery. 

It  is  creditable  to  the  assessors  of  some  of  our  cities  and 
towns  that  they  are  not  willing  partners  to  this  robbery 
of  the  State,  and  that  the  cause  of  failure  in  not  discov- 
ering the  millions  of  property  that  annually  escape  taxation 
is  not  so  much  due  to  official  dereliction,  —  as  to  the  law's 
defects. 

The    majority  say:    "Ineffective  as    is   the    taxation    of  see  page  64. 
securities,  its  weight  is  nevertheless  felt,  both  as  an  actual 
burden  sometimes  and  as   an   imminent   possibility.      The 
temptation  is  always  strong  to  lighten  it  as  much  as  possi- 


146  TAXATION  REPORT. 

ble.  The  statutes  offer  a  simple,  lawful  and  effectual  method 
of  accomplishing  this.  The  taxation  of  such  personal  property 
follows  the  domicile  of  the  owner.  By  establishing  a  domicile 
in  a  town  or  city  where  the  tax  rate  is  low,  or  where  the 
assessors  are  easy-going,  the  taxes  may  be  reduced  greatly, 
perhaps  brought  into  insignificant  dimensions." 

If  the  law  defeats  its  own  purpose,  it  becomes  imperative 
that  the  law  be  strengthened,  or  a  new  system  adopted. 


DIVIDED  TAXES. 

The  proposition  of  the  majority  that  property  owned  by 
Massachusetts  citizens  outside  the  State  should  pay  a  tax 
where  it  is,  because  it  enjoys  the  benefit  of  government 
there,  but  that  the  owner  should  also  be  called  upon  to 
contribute  here  a  presumably  small  income  tax  because  of 
what  he  owes  this  community,  seems  to  be  a  proposition  to 
divide  taxes  into  fractions  that  is  new  to  me.  It  is  a  con- 
fession that  the  citizen  owning  property  out  of  the  State 
should  pay  a  tax  in  his  own  State  as  well  as  a  tax  on  the 
property  in  the  State  where  it  is  situated.  One  tax  is  to  be 
upon  property  according  to  the  protection  which  the  prop- 
erty receives  in  the  place  where  it  is  located ;  another  tax 
upon  the  citizen  for  what  he  receives  where  he  resides. 

To  carry  out  the  proposition  of  the  majority  in  detail,  it 
would  appear,  then,  that  the  tax  should  be  divided  into  as 
many  parts  as  the  governmental  function  enters  into  his 
life.  We  can  enumerate  but  a  few  of  them.  The  man 
owning  no  property  save  the  clothing  upon  his  back,  hav- 
ing no  family,  would  necessarily  be  taxed  for  protection 
to  his  life,  for  the  care  and  lighting  of  streets.  He  does 
not  care  for  public  parks,  libraries  or  schools ;  all  he  needs 
is  that  he  may  be  protected  from  murderous  assault,  and 
that  the  streets  be  passable. 

Mr.  B.  is  a  wealthy  bachelor.  He  needs  protection  to  his 
property,  his  life,  and  for  the  care  and  lighting  of  streets. 
Mr.  C.  is  a  poor  man,  earning  two  dollars  a  day,  with  a 
family  of  children.  He  has  some  uninsured  household  fur- 


DIVIDED   TAXES.  147 

niture.  He  needs  protection  to  his  property  from  fire,  pro- 
tection to  his  life,  the  care  and  lighting  of  streets,  public 
schools  and  public  libraries  for  the  education  of  his  children, 
and  the  public  parks  for  their  well-being.  Under  a  division 
of  taxation,  the  poor  man  should  pay  three  more  taxes  than 
the  rich  bachelor.  The  absurdity  of  this  proposition  should 
be  self-evident.  The  tax  cannot  be  divided.  The  elements 
cannot  be  assessed.  The  plan  is  impracticable  and  impossible 
of  enforcement.  If  practicable,  the  division  would  not  be  a 
fair  one. 

Let  us  take  the  example  of  two  neighbors,  A.  and  B.  A. 
has  a  million  dollars  invested  in  foreign  stocks,  and  netting 
an  income  of  seven  per  cent,  on  the  investment,  without  any 
supervision  of  the  property.  B.  has  a  million  dollars  in- 
vested within  the  State,  over  which  he  gives  close  super- 
vision, from  which  he  receives  an  income  of  seven  per  cent. 
They  both  live  in  houses  of  equal  value,  employ  an  equal 
number  of  servants,  they  enjoy  equally  for  themselves  and 
families  all  the  advantages  of  government.  A.  pays  a  tax 
at  the  rate  of  $15  a  thousand  on  his  income  ;  in  other  words, 
he  pays  $15  on  each  thousand  dollars  of  his  income,  or  a 
total  tax  of  $1,050  on  $70,000.  B.  pays  a  tax  of  $15  a 
thousand  on  his  capital,  making  a  total  of  $15,000.  In 
other  words,  B.,  who  employs  a  thousand  citizens,  thus  in- 
creasing the  taxable  property  of  the  State  and  furnishing 
work  for  a  large  number  of  citizens,  is  charged  the  differ- 
ence between  $1,050  and  $15,000  for  the  mere  protection  of 
his  property.  Take  any  proportion  that  you  may  as  to  that 
part  of  the  tax  which  is  chargeable  to  the  protection  of  prop- 
erty, we  will  still  find  that  A.,  by  merely  paying  a  tax  on 
his  income,  will  receive  a  very  handsome  premium  from  the 
State  in  which  he  lives  as  a  reward  for  his  not  investing  his 
money  within  her  borders,  and  not  employing  her  citizens 
in  useful  enterprises.  B.  pays  not  only  his  share  of  the 
burden,  but  is  taxed  to  double  the  amount  he  would  have  to 
pay  under  a  system  of  equal  taxation.  Where  is  the  justice 
of  saying  that  the  simple  protection  of  property  outweighs 
all  the  other  advantages  of  our  citizenship  in  the  ratio  of 


148  TAXATION  REPORT. 

fourteen  to  one  so  that  we  must  let  off  the  comparatively 
useless  citizen  for  a  trifle  and  throw  his  burden  on  the  in- 
dustry that  enriches  the  Commonwealth  ? 


DISTRIBUTION  OF  COUNTY  EXPENSES. 

I  cannot  agree  with  the  majority  in  their  recommendation 
on  this  subject  to  the  extent  proposed  by  them.  Outside 
of  the  questions  of  taxation,  there  is  a  strong  argument  in 
favor  of  State  control  of  all  correctional  institutions,  and  I 
should  not  object  to  a  bill,  if,  having  this  end  in  view,  it 
should  provide  for  the  assumption  of  such  part  of  the  expen- 
ditures as  should  be  necessary  to  accomplish  that  purpose. 

The  excuse  for  this  plan  of  distribution  and  of  aiding  some 
of  the  farming  towns  is  that,  as  the  State  has  appropriated 
large  sums  of  money  for  internal  improvements  that  have 
tended  to  the  prosperity  of  the  cities,  therefore  the  cities 
should  pay  the  taxes  of  the  towns.  This  is  for  the  most  part 
a  mistake.  Though  the  State  pays  for  them  in  the  first 
instance,  it  is  usually  reimbursed  by  the  cities  where  the 
improvements  are  enjoyed. 

The  revenues  of  our  cities  cannot  be  reduced  but  must  be 
increased  if  we  wish  to  escape  the  danger  and  the  shame  of 
filthy  streets,  foul  sewers,  bad  and  insufficient  water  supply, 
poisonous  illuminating  gas,  and  the  moral  and  physical 
disease-breeding  tenement-houses. 

The  city  of  Boston  seriously  needs  the  immense  annual 
sum  of  which  she  would  be  robbed  under  the  plan  proposed 
by  the  majority. 

Cambridge  is  handicapped  by  the  pleasurable  burden  of 
Harvard  University.  Her  streets  need  more  than  her  people 
are  willing  to  pay.  She  needs  the  $54,000  of  which  she 
would  be  deprived  under  this  plan. 

Fall  River  would  be  benefited,  and  could  well  expend  all 
that  would  come  to  her.  But  is  there  not  a  better  way? 
Fall  River  has  been  a  mint  of  wealth  to  many  families.  She 
is  suffering  from  the  bane  of  absentee  landlordism,  yet  her 
citizens  are  not  beggars  at  the  hands  of  the  State.  Their 


COUNTY  EXPENSES.  149 

struggles  under  many  hardships  have  proved  the  heroism  of 
her  people.  The  bill  for  State  assessment,  printed  in  the 
Appendix  to  this  report,  will  aid  her  and  all  communities 
without  destroying  any  share  of  self-respect. 

The  tax-dodging  towns  are  held  up  to  general  derision  by 
nearly  all  classes  of  tax  reformers,  but  no  drastic  measures 
of  reprisal  for  past  sins  can  rob  these  towns  of  the  beauty 
with  which  nature  has  endowed  them,  and  none  but  the 
envious  can  blame  any  one  for  seeking  a  summer  home 
within  their  beautiful  borders.  A  uniform  tax  upon  all 
property  will  remove  this  scandal.  The  motive  that  prompts 
the  removal  from  Boston  and  other  places  before  May  1  will 
be  removed.  Boston  may  thus  receive  her  due  share,  and 
there  will  remain  ample  revenue  for  the  summer  retreats. 

We  are  told  that  the  farming  and  small  manufacturing 
towns  will  gain  in  revenue  through  the  distribution  pro- 
posed. The  old  adage,  that  "  What  comes  easy,  goes  easy," 
may  apply  in  this  as  in  other  cases.  Under  equal  taxation, 
the  small  manufacturing  and  the  farming  towns  will  have  the 
advantage  of  lower  tax  rates,  and  the  local  pride  (a  saving 
quality  to  man  and  town)  will  be  preserved.  The  motive 
for  a  wise  economy  will  not  become  a  lost  faculty.  The 
majority  agree  that  the  question  of  the  burden  upon  the 
small  farming  towns  is  not  really  a  question  of  taxation. 
They  are  burdened  by  a  decrease  in  population,  and  all  that 
goes  with  that  decrease.  In  these  days  of  electric  power, 
the  towns  now  remote  can  be  brought  so  near  in  time  to 
larger  towns  and  cities  that  valuation  will  rise  with  increase 
of  population.  When  the  people  are  wise  enough  to  see  that 
the  best  help  to  a  town  is  to  be  found,  not  in  gratuities,  but 
in  the  awakening  of  latent  energies  with  a  larger  life  by  a 
closer  contact  with  thriving  communities,  they  will  ask  the 
General  Court,  not  to  exempt  intangible  property  from 
taxation,  but  to  open  up  their  territory  for  residences  and 
manufacturing  purposes,  and  thus  furnish  another  avenue 
for  the  investment  of  the  surplus  capital  of  the  State. 


150  TAXATION  KEPORT. 

SAVINGS  BANKS. 

Savings  banks  were  instituted  to  encourage  habits  of  fru- 
gality, and  to  provide  a  place  where  the  money  thus  saved 
could  be  deposited,  and  where  the  interest  on  the  investments 
could  be  credited  to  the  depositors.  They  were  not  intended 
for  those  of  large  means,  or  for  persons  financially  competent 
to  care  for  their  own  investments. 

The  General  Court,  acting  upon  the  belief  that  the  savings 
banks  were  true  to  their  original  intent,  placed  a  tax  of  but 
one-half  of  one  per  cent,  on  such  deposits.  If  it  shall  appear 
that  large  amounts  of  capital  are  deposited  in  the  savings 
banks  for  the  purpose  of  escaping  taxation,  such  legislation 
should  be  enacted  as  would  compel  such  depositors  to  pay 
their  full  share  of  the  expenses  of  government. 

As  far  back  as  1851  the  Savings  Bank  Commissioners  say 
(page  295)  :  "  Persons  who  are  regarded  wealthy,  make  de- 
posits in  savings  banks  to  the  extent  of  the  legal  limits,  for 
the  very  purpose  of  accumulation,  and  of  availing  themselves 
of  a  share  in  the  surplus  profits  every  fifth  year."  And 
again:  "The  limitation  by  law,  of  the  amount  of  deposits 
which  any  individual  can  make,  is  easily  defeated  by  making 
the  deposit  in  the  names  of  other  members  of  the  family,  or 
of  friends  of  the  depositor,  or  by  making  deposits  in  several 
institutions." 

The  commissioners  of  1853  (page  53)  say:  "If  men  of 
competent  means,  in  their  own  names  and  in  the  names  of 
others,  are  to  be  allowed  to  make  deposits  for  the  sake  of  the 
large  surplus  accruing,  in  great  part,  from  the  hard-earned 
pittances  of  the  poorer  classes,  the  chief  design  of  the  insti- 
tution will  be  perverted." 

The  commissioners  of  1855  say  (page  296)  :  "  As  we  often 
intimated,  the  accumulations  of  these  banks  are  derived,  in 
great  measure,  from  the  class  of  men  who  are  able  to  manage 
their  own  investments,  and  whose  means 'are  too  ample  to 
need  the  gratuitous  aid  of  others  in  this  particular." 

In  1870  the  commissioners  report  (page  298)  :  "  It  is  not 
very  unusual  to  find  in  one  institution  several  deposits  evi- 


SAVINGS   BANKS.  151 

dently  the  property  of  one  person,  though  standing  in  the 
names  of  others." 

In  1870,  Governor  Claflin,  in  his  message,  used  these 
words:  "  These  institutions  are  becoming  still  more  the 
favorite  places  of  deposit,  not  only  for  persons  of  small 
means,  but  also  for  those  seeking  investment  for  very  con- 
siderable sums."  In  1871  he  emphasized  his  previous  state- 
ment in  these  words  :  * '  It  is  very  evident  that  a  large  share 
of  this  increase  is  not  the  savings  of  labor.  Each  year  shows 
more  deposits  by  capitalists." 

My  associates  say  :   "  General  testimony  shows  that  very  See  page  72. 
considerable  deposits  come    from    comparatively  well-to-do 
persons." 

The  Bureau  of  Statistics  of  Labor  in  1872  and  1873  made 
a  careful  examination  of  the  deposits  in  savings  banks. 
Their  analysis  of  the  report  of  the  Bank  Commissioners  for 
1870  was  that  the  amount  of  thirteen- fourteenths  of  the 
whole  number  of  the  deposits  was  but  little  more  than  the 
amount  of  the  remaining  one-fourteenth.  There  were  37,249 
deposits  made,  in  sums  of  and  exceeding  $300.  These 
deposits  amounted  to  $21,356,304.33,  or  an  average  of 
$573.33  to  each  deposit.  The  remaining  469,624  deposits 
made  in  that  year  amounted  to  $25,925,099.07 — an  average 
of  $55.20  on  each  deposit.  These  figures  were  justified  by 
an  investigation  made  by  the  Bureau  in  1873  and  1874. 

In  consideration  of  these  facts,  I  recommend  that  the  vast 
sums  escaping  taxation  through  imposition  upon  the  gener- 
ous provisions  of  the  State  should  be  reached,  and  that 
amounts  on  deposit,  in  sums  of  $500  or  over,  should  be 
taxed  above  the  present  rate  ;  and  that  the  Bureau  of  Statis- 
tics of  Labor  be  instructed  to  obtain  and  collate  facts  as  to 
the  number  and  amount  of  all  deposits  made  in  one  year,  and 
of  all  deposits  of  and  exceeding  $500  standing  to  the  credit 
of  any  one  individual  for  himself  or  family,  or  as  trustee. 


152  TAXATION  REPORT. 


EXEMPTED  INSTITUTIONS. 

The  Commonwealth,  in  order  to  encourage  investment  in 
vessels  engaged  in  foreign  trade,  exempts  the  owners  of  such 
vessels  from  any  tax  save  on  the  income  from  the  enterprise, 
and  then  reimburses  the  towns  where  such  ships  are  owned. 
While  not  favoring  this  exemption,  I  am  of  the  opinion  that 
the  principle  should  apply  to  charitable  and  educational  insti- 
tutions. A  college,  university  or  other  public  building,  with 
its  ample  grounds,  may  be  an  adornment  to  any  city  or  town  ; 
but  it  is  questionable  whether  the  city  where  such  institutions 
are  located  receives  such  revenue  from  the  tax  on  the  income 
and  personal  property  of  the  professors  and  officers  as  would 
be  received  if  the  land  was  occupied  for  residence  or  manu- 
facture. 

SHIFTING  OF  TAXES. 

see  page  32  The  majority  say  that  taxes  on  real  estate,  "  especially  in 

the  cities,  while  paid  in  the  first  instance  by  the  owners  of  real 
estate,  may  be  shifted  by  them  to  others  in  the  rental  for  the 
use  of  the  property,  or  perhaps  further,  in  the  price  of  articles 
sx)ld  or  made  there."  The  commissioners  recognize  the  diffi- 
culty of  the  problem  of  so  adjusting  taxes  that  the  burden 
may  fall  upon  the  owner  of  the  property,  and  the  owner 
only,  and  then  proceed  to  throw  the  extra  burden  upon  this 
class  of  property. 

The  conviction  that  the  burdens  of  civilization  are  more 
and  more  placed  on  the  backs  of  the  working  people  may 
yet  engulf  our  country  in  greater  difficulties  than  it  has  yet 
encountered.  The  wage  worker  and  the  farmer  cannot  shift 
their  burden  ;  it  must  be  lessened,  or  they  will  rebel.  Under 
our  form  of  government,  that  rebellion  may  be  a  peaceful 
one ;  but  wisdom  would  indicate  that  it  is  wise  not  to  in- 
crease their  burden  by  the  establishment  of  a  privileged 
class,  consisting  of  persons  exempted  from  taxation. 

Chief  Justice  Doe  of  New  Hampshire  says  :  * '  By  a  selec- 
tion of  subjects  for  taxation,  or  other  method  of  classifying 
persons,  requiring  some  to  pay  their  neighbors'  share,  the 


SHIFTING   OF   TAXES.  153 

community  would  be  divided  into  inferiors  and  superiors, 
and  the  agency  established  for  the  common  benefit  of  all 
would  be  carried  on,  without  authority,  for  the  private  in- 
terest or  the  emolument  of  the  privileged  class,  to  whom  for 
no  public  purpose  others  would  be  forced  to  pay  annual 
tribute.  The  custom  of  the  New  Hampshire  slavery,  which 
transferred  to  some  the  ownership  of  the  earnings  and  labor 
of  others,  having  been  abolished  by  the  first  reservation  of 
the  contract  [constitution] ,  it  is  impossible  under  that  and 
other  reservations  of  equal  rights  to  introduce  an  inequality 
of  classes  that  would  differ  in  degree  only,  and  not  in  legal 
principle,  from  the  custom  that  vested  in  one  class  the  entire 
product  of  the  industry  of  another  class."  (60  N.H.  255  ) 
Governor  Pattison  of  Pennsylvania  gave  warning  in  two 
inaugurals,  as  follows:  "Such  unjust  discrimination  is 
working  untold  evil  to  our  people;  is  oppressing  the  poor, 
is  exempting  the  rich,  is  day  by  day  establishing  unfortunate 
social  distinctions  that  are  foreign  to  our  principles  of  gov- 
ernment, destructive  to  the  happiness  and  energies  of  men, 
and  blasting  the  hopes  that  we  have  all  prayerfully  enter- 
tained of  our  country  becoming 'the  home  of  a  contented  and 
happy  people." 

HOUSE  RENTAL  TAX. 

I  cannot  give  my  assent  to  the  house  rental  tax  bill  pro- 
posed, because  it  seems  almost  purely  arbitrary  and  without 
foundation  in  principle.  If  it  is  not  unconstitutional,  it 
ought  to  be.  Some  illustrations  of  how  the  law  would  work 
may  tend  to  show  its  unreasonableness. 

A.  and  B.  are  two  brothers,  farmers.  A.  has  a  family, 
and  owns  and  occupies  a  house  of  a  rental  value  exceeding 
$400.  B.  owns  most  of  the  knd,  but,  as  he  is  not  married, 
he  boards  with  A.  A.  has  no  income  except  what  comes 
from  his  farm.  B.,  having  no  family,  has  invested  his  sav- 
ings in  stocks  and  notes.  A.  is  taxed  on  his  house  and 
farm,  and  is  then  taxed  on  a  presumed  income  that  does  not 
exist.  B.  is  taxed  on  his  land  only,  and  escapes  any  tax  on 
his  stocks  and  notes. 


154  TAXATION  REPORT. 

C.  has  inherited  a  house  in  a  small  city.  He  is  depend- 
ent upon  a  salary  of  $1,500  a  year.  His  mother  wishes  to 
live  with  him,  so,  to  please  her,  he  pays  the  taxes  on  the 
house,  and  is  then  taxed  for  honoring  his  mother.  D.,  the 
other  son,  took  his  share  of  the  estate  in  intangible  property, 
so  C.  pays  two  taxes,  and  D.  pays  none. 

E.  died,  leaving  $864,000  in  stocks,  bonds,  notes,  etc. 
He  never  paid  any  tax,  and  would  not  have  had  to  pay  the 
house  rental  tax  while  living,  because  he  lived  so  poorly  that 
the  assessors  did  not  dare  assess  him  for  even  a  poll  tax,  for 
fear  he  would  become  a  town  charge. 

F.  loves  show,  and  lives  in  a  house  beyond  his  income. 
Gr.  dislikes  show,  and,  although  quite  wealthy,  prefers  to 

live  in  a  modest  house  of  not  more  than  $400  rental  value. 

H.  is  a  man  of  fine  tastes,  and,  although  he  receives  a  small 
salary,  he  has,  by  his  taste  and  labor,  so  beautifully  designed 
and  cared  for  his  house  and  grounds  that  they  would  com- 
mand a  rental  of  more  than  $400.  He  is  taxed  on  his  taste. 

I.  has  a  salary  of  $5,000  a  year.  He  neglects  the  ex- 
terior of  his  house,  and  expends  large  sums  on  the  interior 
not  visible  to  the  assessor. 

J.  is  a  society  tailor,  and  he  thinks  it  desirable  that  he 
should  live  in  an  expensive  house,  to  secure  trade.  He  is 
taxed  because  of  his  occupation . 

K.  is  a  man  of  great  wealth ;  his  house  is  so  expensive 
that  no  man,  except  a  man  of  equal  wealth,  could  afford  to 
live  in  it.  No  proper  rental  value  can  be  fixed.  He  has 
millions  of  intangible  property,  and,  if  he  is  taxed  at  all,  the 
tax  on  the  basis  of  the  rental  value  would  be  insignificant. 

These  are  but  a  few  of  the  exceptions  that  could  be  enu- 
merated. While  it  is  true  that  exceptions  sometimes  prove 
the  rule,  it  is  not  true  that  a  rule  is  conclusively  proven 
which  is  nearly  all  exceptions. 

This  is  in  theory  a  tax  on  income,  whether  derived  from 
the  farm  or  other  sources.  The  farmer  who  occupies  a 
house  of  over  $400  rental  value  ought  not  to  be  taxed  on  the 
income  of  his  farm.  He  might  ask,  "Is  my  right  to  take 
the  fruits  of  my  property  a  commodity,  any  more  than  the 


THE   INHERITANCE   TAX.  155 

right  to  draw  partnership  dividends,*  which  the  court  has 
decided  could  not  be  excised  ?  "  Can  the  Legislature  tax  A's 
farm,  and  then  excise  it  without  excising  his  brother's  farm, 
alongside?  If  so,  what  is  the  equal  taxation  clause  of  the 
constitution  worth? 


THE  INHERITANCE  TAX. 

I  am  in  favor  of  an  inheritance  and  succession  tax,  but  I 
favor  an  amendment  to  the  bill  submitted  by  the  majority, 
by  the  addition  of  a  graduated  rate.  In  view  of  the  ex- 
perience of  enlightened  countries,  like  Great  Britain  and 
Switzerland,  the  fear  that  such  a  system  would  be  declared 
unconstitutional  seems  to  me  to  be  ill  founded.  The  Con- 
stitution says  the  property  tax  must  be  proportional  and 
reasonable,  but  an  excise  like  this  is  only  required  to  be 
reasonable. 

The  best  minds  of  the  world  now  approve  the  graduated 
scale,  and  it  does  not  seem  possible  that  such  a  system  could 
be  deemed  "unequal  or  contrary  to  common  right."  The 
savings  bank  tax  was  widely  objected  to,  on  the  ground  that 
it  was  an  attempt  at  the  unequal  taxation  of  property  under 
disguise  of  the  excise ;  but  the  courts  of  the  United  States 
and  of  this  State  sustained  the  law. 

I  should,  therefore,  earnestly  recommend  that,  after  a 
reasonable  exemption  of  small  estates,  a  graduated  rate  be 
adopted.  I  trust  that  the  opinion  of  the  court  may  be 
asked,  if  deemed  advisable,  before  the  passage  of  the  bill  by 
the  Legislature. 

My    approval   of   the   proposal   of    my   associates,    thus 

*  In  the  case  of  Gleason  v.  McKay,  134  Massachusetts,  the  court  said :  "  If  this 
tax  can  be  upheld,  it  seems  to  us  that  the  necessary  result  will  be  that  the  Legis- 
lature has  the  power  to  select  any  business,  occupation  or  calling  carried  on,  or  any 
natural  right  enjoyed  under  the  protection  of  our  laws,  and  impose  upon  it  at  its 
will  a  special  tax  or  excise.  This  would  be  extending  the  meaning  of  the  word 
'commodities'  beyond  any  reasonable  limits.  Its  effects  would  be  to  break  down 
limitations  which  the  Constitution  intended  to  impose  upon  the  power  of  the  Legis- 
lature for  the  purpose  of  securing  the  end  that  all  sums  necessary  for  the  defence 
and  support  of  the  government  should  as  far  as  practicable  be  raised  by  the  equal 
taxation  of  all  the  people." 


156  TAXATION  REPORT. 

amended,  does  not  carry  with  it  the  assumption  that  it 
will  be  found  to  realize  the  revenue  expected,  nor  do  I  favor 
it  as  a  means  of  exempting  intangible  personalty. 


INTANGIBLE  PERSONALTY. 

I  maintain  that  intangible  personalty  should  be  taxed  as 
all  other  property  is  taxed,  and  that  a  system  should  be 
adopted  to  prevent  its  escape.  The  State  would  then  enjoy 
a  rate  so  low  that  the  manufacturer,  farmer  and  business  man 
of  every  class  would  not  be  burdened  with  the  weight  of  the 
taxes  of  others ;  that  the  holder  of  notes,  stocks  and  bonds 
would  find  his  tax  easier,  because  his  neighbor  would  no 
longer  escape  his  share  of  the  burden  and  responsibility  of 
society ;  and  that  the  burdens  of  the  poor  from  taxes  now 
shifted  upon  them  through  rents  would  be  lessened. 

The  system  of  State  assessments  herein  recommended  is 
in  line  with  the  spirit  of  the  men  who  founded  the  Common- 
wealth, of  whom  it  has  been  said  :  "  When  they  turned  their 
faces  toward  a  land,  their  course  was  the  path  to  empire,  and 
the  sunlight  of  prosperity  warmed  the  very  deserts  that  they 
trod."  The  system  adopted  by  the  founders  of  the  State  has 
not  been  impracticable  or  unjust.  The  principle  of  taxation 
they  established  was  democratic,  and  will  last  as  long  as  the 
spirit  of  democracy  remains  with  us.  The  accumulation  of 
vast  wealth  in  the  hands  of  the  few  has  so  awakened  the 
spirit  of  greed  and  so  smothered  the  consciences  of  men 
that  the  ancient  system  of  the  Commonwealth  in  matters  of 
taxation  has  been  seriously  impaired.  The  exemption  from 
public  services  of  any  kind  of  those  owing  such  services  and 
competent  to  perform  them  establishes  a  privileged  class. 
The  payment  of  a  debt  to  the  State  by  those  who  owe  the 
debt  should  not  be  deemed  a  hardship ;  and  it  is  not  when 
all  share  according  to  their  ability. 

The  throwing  of  taxes  on  the  necks  of  others  is  not  only  a 
wrong  to  the  State  but  a  wrong  and  cruelty  to  those  thus 
doubly  burdened.  I  solemnly  protest  that  the  adoption  of 
the  proposals  of  my  associates  would  mark  the  decadence 


INTANGIBLE   PERSONALTY.  157 

of  Massachusetts  prosperity.  The  fact  that  the  men  who 
would  be  exempted  from  bearing  their  share  of  the  taxes 
>y  the  abolition  of  the  tax  on  intangible  personalty  are  the 
richest  in  the  Commonwealth  and  are  the  best  able  to  bear 
taxes,  is  notorious. 

In  1893,  out  of  $8,473,200  in  foreign  stocks,  shown  in  the 
;ax  payers'  returns  to  the  assessors  of  Boston  (about  one- 
ifth  being  assessed  on  such  returns),  $4,813,700  was  in  the 
wealthy  Back  Bay  ward,  Ward  11,  against  $3,659,500  in  all 
he  other  twenty-four  wards.     Lax  as  are  our  laws  relative 
;o  taxation  of  intangible  personalty,  the  city  of  Boston  re- 
jeived,  on  this  basis,  more  than  $650,000  in  1893  from  this 
ward  alone. 

This,  with  the  release  from  liability  of  certain  persons  in 
hat  class  to  pay  many  times  as  much  more  in  taxes  which 
hey  dodge,  and  exemption  from  taxes  on  such  further  prop- 
erties now  taxable  as  they  may  choose  to  put  into  this  form, 
s  the  vast  annual  subsidy  which  it  is  proposed  to  give  to  that 
>articular  class  of  property  holders  in  this  aristocratic  ward, 
with  like  donations  to  that  class  throughout  the  State. 

Laborers  who  bear   tax  through  rent  and   lodging  bills, 
'armers,  merchants,    manufacturers   and   the   general   com- 
munity are  now  doubly  taxed  to  make  up  the  deficit  caused 
by  permitting  the  holders  of  such  securities  to  escape. 

My  associates  are  so  deeply  impressed  by  our  so-called 
double  taxation  of  the  holders  of  foreign  stocks  —  an  evil 
which  they  say  our  State  is  estopped  from  denying,  but 
which  I  think  can  be  proved  does  not  exist  at  all  —  that  they 
feel  it  their  duty  to  impose  a  certain  double  tax  at  death  on 
the  real  estate  that  has  borne  the  tax  all  through  the  de- 
cedent's life,  to  cure  it.  The  statistics  presented  show  great 
volumes  of  personal  property  left  at  death,  in  which,  if  the 
data  as  to  the  division  of  Massachusetts  personalty  are  cor- 
rect, there  is  an  amount  of  intangible  personalty  ample  to 
bear  all  the  death  duties  they  suggest.  With  this  fact  before 
us,  why  should  we  insist  on  doubly  taxing  real  estate  at 
death,  that  intangible  personal  property  may  bear  no  tax  at 
all  in  life? 


158  TAXATION  REPORT. 

My  associates  propose  to  exempt  notes,  stocks,  bonds, 
income  and  the  other  items  generally  classified  as  intangible 
property. 

The  general  drift  of  their  reasons,  if  I  understand  them, 
is  :  — 

1.  That  the  great  bulk  of  intangible  personalty  escapes, 
and  so  its  taxation  is  neglected  or  a  failure. 

2.  That  the  distribution  of  tax  is  unequal,  going  largely 
to  towns  known  as  tax-dodging  retreats. 

3.  That  in  some  cases  the  tax  involves  double  taxation. 

4.  That  the  tax  on  this  property  is  heavy  in  proportion 
to  its  income,  sometimes  reaching  thirty-three  and  one-third 
per  cent. 

5.  That  exemption  of  the  securities  of  other  States  would 
lead  to  a  consistent  system  free  from  double  taxation,  based 
on  the  taxation  of  tangible  property  where  it  is. 

6.  That  sworn  returns  are  demoralizing ;  that  under  them 
the  rich  could  evade  by  change  of  domicile  or  of  securities, 
while  the  poor  could  not. 

I  confess  that  reasons  of  this  character,  while  they  suggest 
a  needed  reform  in  our  tax  system,  do  not  impress  me  as 
being  good  reasons  for  the  system  proposed  by  them.  I 
prefer  the  tax  laws  as  they  are,  to  the  proposed  legislation, 
which  is  a  public  confession  that  the  State  is  impotent  to 
compel  obedience  to  the  law.  The  enactment  of  such  a  law 
would  be  the  instalment  here  of  a  privileged  class  of  para- 
sites, enjoying  all  the  advantages  of  our  civilization  at  the 
expense  of  their  neighbors. 

I  agree  with  my  associates  that  the  great  bulk  of  intangible 
properties  do  escape  taxation,  but  do  not  find  any  good  argu- 
ment in  that  statement  for  letting  off  what  we  do  tax.  If 
one  man  neglects  to  perform  his  duty,  is  that  any  reason  why 
other  men  should  be  excused  from  performing  theirs  ?  If  a 
small  body  of  men  are  law-breakers,  are  we  to  abolish  all 
law?  The  claim  has  no  force  until  it  shall  be  shown  (as  it 
is  not)  that  there  is  some  equitable  reason  for  discriminating 
in  taxation  between  notes  and  bonds  on  the  one  hand,  and 
real  estate,  live  stock,  machinery  and  goods  on  the  other. 


INTANGIBLE  PERSONALTY.  159 

This  is  not  attempted.  If  it  is  as  just  to  tax  A.  on  his  bonds 
as  B.  on  his  horse,  where  is  the  force  in  saying  that,  if  C. 
escapes  on  another  bond,  the  tax  he  shirks  ought  to  be  made 
up  by  a  further  contribution  from  B.  on  his  horse,  but  that 
A.  should  not  be  made  to  help.  B.  is  no  more  to  blame  for 
C.'s  fraud  than  A.  The  increased  tax  resulting  from  such  a 
system  is  a  public  burden  due  from  all  whose  properties  are 
reached.  There  would  be  no  excuse  for  letting  off  a  single 
bond,  though  all  the  others  escaped.  Much  is  said  about 
the  tax  on  stocks  and  bonds  largely  falling  on  widows  and 
orphans  through  trustees.  I  do  not  think  it  is  true,  for  the 
inference  is  drawn  by  the  proportion  shown  in  trustees' 
returns,  and,  as  trustees  make  more  returns  than  others,  the  see  page  43. 
proportion  will  not  continue  in  the  amount,  five  times  as 
great,  taxed  by  doomage.  But  suppose  it  is  true.  Ought 
not  a  widow  or  orphan  pay  taxes  on  a  taxable  bond  as  much 
as  on  a  taxable  horse  ? 

I  commend  the  sound  sense  of  the  Maine  tax  commission 
of  1889  :  "  We  have  no  sympathy  with  the  idea  that  because 
some  men  will  defraud  the  revenue,  because  they  will  con- 
ceal property,  commit  perjury,  and  resort  to  all  conceivable 
trickery  to  prevent  taxation,  therefore  the  whole  classes  of 
property  which  they  would  thus  hide  from  the  assessor 
should  be  exempted  by  law."  (Report,  page  11.) 

One  desideratum  of  my  associates  is  the  relief  of  assessors 
from  vexatious  duties.  They  certainly  have  not  asked  it. 
In  spite  of  the  fact  that  many  even  of  our  cities,  as  if  not 
caring  to  secure  effective  service,  hardly  pay  their  assessors 
more  than  their  unskilled  laborers,  we  have  a  body  of  officers 
of  whom  on  the  whole  we  may  well-  be  proud.  It  is  a  strik- 
ing fact,  relative  to  the  numerous  efforts  for  the  exemption 
of  intangible  property,  that  they  have  no  support  from  these 
men  who  bear  the  burden  of  the  work  my  associates  deem  so 
difficult.  They  understand  our  tax  problems  practically  as 
no  others  do.  They  are  chosen  for  their  integrity  to  appor- 
tion the  burdens  of  the  citizens.  I  have  yet  to  hear  of  one 
assessor,  from  Thomas  Hills,  twenty-five  years  chief  of  the 
Boston  Board,  an  authority  of  national  reputation,  with  the 


160  TAXATION  REPORT. 

widest  experience  of  any  man  living  on  the  taxation  of  these 
properties,  down  to  the  assessor  latest  elected,  who  is  not 
inflexibly  opposed  to  the  exemption  of  intangible  properties. 
No  doubt  our  boards  contain  some  such  men,  but  they  are 
not  apparent.  The  assessors  see  so  clearly  the  injustice 
and  public  injury  of  removing  from  our  wealthiest  class 
the  body  of  their  taxes,  that  they  stand  practically  a  unit  — 
a  peerless  jury  —  in  favor  of  the  system  which  originated 
in  Massachusetts,  and  by  the  simple  force  of  its  inherent 
justice  has  spread  through  the  Union,  holding  its  own  in 
spite  of  the  efforts  of  organized  wealth  and  an  almost  united 
press. 

The  extra  cost  of  assessing  personal  property  in  Boston 
above  the  expense  necessary  if  not  taxed,  Mr.  Hills  figured 
at  $14,600  in  1889.  The  exemption  of  intangible  property 
alone,  as  proposed,  would  hardly  save  anything. 

The  justice  of  taxing  notes,  stocks  and  bonds  deserves  a 
moment's  inquiry.  Allegations  are  sometimes  made  that 
when  the  holder  of  the  tangible  property,  of  which  these  are 
the  evidences,  is  taxed,  the  holder  of  the  evidences,  if  taxed, 
is  double  taxed.  Take  an  instance.  A.  owns  a  stock  of 
goods,  and  hires  B.,  an  impecunious  clerk.  Who  but  A. 
owes  the  taxes  on  that  property?  He  sells  it  to  B.,  and 
takes  his  note,  secured  if  necessary  by  mortgage.  A.  is  no 
poorer  by  his  even  bargain.  If  so,  he  would  not  have  made 
it.  He  owes  just  as  much  tax  as  before.  He  gets  the  in- 
come through  his  interest  worth  just  as  much  as  his  goods. 
If  anybody  is  to  be  exempted,  it  ought  to  be  the  man  with 
the  tangible  goods,  who  has  not  become  rich  by  the  level 
bargain.  A  note  or  bond  is  the  very  thing  that  ought,  with 
see  page  84  unerring  certainty,  to  be  taxed.  My  associates  say  truly  : 
"The  situation  as  to  securities  is  obviously  different.  Their 
selling  price  and  the  rate  of  interest  they  bear  are  deter- 
mined by  the  international  money  market,  and  holders  of 
them  cannot  possibly  shift  the  taxes  on  them  by  demanding 
a  higher  rate  of  interest."  Conversely  then,  neither  can 
they  be  made  to  accept  a  lower  rate,  for  the  same  reason. 
No  tax  shift  can  excuse  them. 


INTANGIBLE  PERSONALTY.  161 

Take  the  debts  of  Massachusetts  corporations.  Those  of 
the  railroads  alone  reach  $158,000,000 ;  of  the  street  rail- 
ways, $31,000,000  more;  of  the  others,  a  vast  untold  sum. 
The  road-beds  of  railroads  are  not  taxed  locally.  The  assets 
of  corporations  are  presumably  the  total  bought  with  the 
stock  plus  the  bonds.  They  are  mainly  tangible  property. 
The  market  value  of  their  stock,  which  is  all  we  tax,  repre- 
sents these  assets  less  the  debts.  Their  tangible  property, 
represented  by  their  debts,  does  not  get  taxed  at  all  under 
our  laws,  when  they  have  a  corporation  surplus.  We  trust, 
for  taxing  that  indirectly,  to  the  taxation  of  the  bonds  in 
private  hands,  which  it  is  now  proposed  to  abolish.  My 
associates,  therefore,  urge  that  assets  which  must  reach 
hundreds  of  millions  in  Massachusetts,  owned  by  corpora- 
tions,—  tangible  properties,  —  shall  neither  be  taxed  in  the 
abstract  or  concrete,  at  all.  Nor  can  we  lower  the  charges 
of  quasi-public  corporations  on  this  account,  for  their  bonds 
are  already  placed,  and  their  creditors  reap  this  profit.  In 
the  case  of  a  company  like  our  great  street  railway  cor- 
poration, as  to  which  the  public  is  practically  fettered  so 
far  as  relates  to  fares  for  a  long  period,  millions  of  tangible 
property,  other  than  real  estate  and  machinery,  may  be 
added  without  public  obligation  in  the  shape  of  taxes  of 
any  kind,  either  on  the  property  or  the  bonds  or  in  reduced 
fares. 

There  is  still  another  danger,  —  perhaps  not  so  certain, 
but  a  real  danger.  The  United  States  law  forbids  the  taxa- 
tion of  national  bank  stock  at  a  higher  rate  than  is  laid  on 
other  moneyed  capital  in  the  hands  of  individual  citizens. 
True,  it  has  been  held  that  savings  bank  deposits  may  be  taxed 
at  a  lower  rate,  or  exempted,  without  impairing  the  right  to 
tax  bank  stock.  The  law,  as  defined  by  the  supreme  court,  is 
in  substance  :  « '  The  main  purpose  of  Congress  in  fixing  limits 
to  State  taxation  on  investments  in  shares  of  national  banks 
was  to  render  it  impossible  for  the  State,  in  laying  such  a 
tax,  to  create  and  foster  an  unequal  and  unfriendly  competi- 
tion by  favoring  institutions  or  individuals  carrying  on  a 
similar  business  and  operations  and  investments  of  a  like 


162  TAXATION  KEPORT. 

character."  (Mercantile  Bankv.  New  York,  121 U.  S.  138. ) 
Who  shall  guarantee  that  we  can  continue  to  enjoy  our  taxes 
on  national  bank  stock,  of  which  we  collected  $1,543,535 
last  year,  if  our  friends  are  permitted  to  exempt,  as  they  pro- 
pose, the  private  bankers  in  the  neighborhood  of  State  Street 
from  the  taxes  they  now  pay  on  five  millions  at  least  of 
banking  capital  which  does  compete  in  banking  operations, 
as  well  as  all  other  moneyed  capital  in  the  hands  of  individ- 
ual citizens,  not  in  corporations  ? 

In  the  eighteen  rich  towns  cited  by  my  associates,  they 
find  fifty-three  millions  of  intangible  personalty  taxed.  Do 
these,  with  State  Street  and  the  Back  Bay,  constitute  the 
most  desirable  and  needy  region  in  which  to  pour  out  the 
largess  of  our  exemption  ?  The  ills  of  the  farmer  are  truly 
recited,  and  my  associates  propose  to  make  up  to  him  in 
part  what  their  plan  will  cost  him.  Another  class  is  little 
considered.  My  associates  say  that  real  estate  owners  shift 
their  taxes  by  rent  charges.  On  whom?  Largely  on  the 
laboring  men,  who  are  obliged  to  bear  rent  or  lodging 
charges,  and  who  often  have  no  taxable  property  at  all. 
These  taxes  shifted  are  grievously  increased  already  by  the 
laxity  of  our  present  laws  permitting  men  to  dodge  taxes  in 
this  State  on  thousands  of  millions.  These  unjust  burdens, 
and  more,  the  laboring  man  must  continue  to  bear  if  the 
proposed  plan  is  adopted. 

The  next  objection  to  this  plan  of  exempting  intangible 
properties  is  its  inconsistency.  Why  are  the  investments 
of  individuals  of  this  class  to  be  exempted,  while  those  of 
savings  bank  depositors  are  to  remain  taxed  ? 

Will  the  numerous  business  corporations  remain  content 
to  pay  taxes  on  their  notes  and  accounts  receivable,  bonds, 
and  other  intangible  investments,  while  such  properties  are 
no  longer  taxed  in  the  hands  of  private  individuals  ? 

Is  it  right,  when  a  new  tax  is  to  be  put  on  the  widow  and 
heirs,  to  help  the  holders  of  notes  and  bonds,  that  the  notes 
and  bonds,  in  which  they  have  themselves  an  interest  as 
beneficiaries  of  life  insurance  held  by  their  respective  com- 
panies, should  continue  under  taxation? 


INTANGIBLE  PERSONALTY.  163 

If  intangible  property  in  private  hands  is  exempt,  we  can- 
not tax  the  same  as  fire  insurance  assets  without  unequally 
taxing  those  who  bear  the  cost  of  insurance. 

It  is  important  to  ascertain  what  we  shall  lose  in  taxes 
now  collected  by  exempting  intangible  personalty.  In  this 
inquiry,  I  cannot  accept  the  statement  for  Boston  by  my 
associates,  that  the  tangible  personalty  assessed  exceeds  the 
intangible,  nor  their  figures  based  thereon.  They  give  the 
following  as  the  total  amounts  of  personalty  assessed  in 
1896,  saying :  — 

"Wards  6  and?  (business  wards),   .        .        .        .    $77,840,700          See  page  48. 
Ward  11  (residence  ward) 66,500,200 

*  *  It  is  true  that  in  the  two  business  wards  there  is  some 
assessment  of  the  intangible  personalty ;  but  after  consulta- 
tion with  the  chairman  of  the  board  of  assessors,  we  are  led 
to  believe  it  will  hardly  be  so  much  as  twenty-five  per  cent, 
of  the  total  personalty." 

I  think  they  misunderstood  the  chairman.  My  under- 
standing of  his  idea  is  that  there  were  five  millions  or  more 
assessed  in  Ward  6  to  the  bankers,  all  intangible  personalty ; 
and  that  of  the  rest,  in  the  two  wards  6  and  7,  perhaps  not 
over  one-quarter  was  intangible.  Again,  even  if  in  wards  6 
and  7  (as  I  am  confident  is  not  the  case)  there  is  only  one- 
quarter  intangible,  my  associates  must,  to  justify  their  claim 
of  an  equal  division,  assume  that  there  were  fourteen  mil- 
lions of  tangible  in  Ward  11,  which  is  far  wide  of  the  truth. 
Ward  11  is  much  like  their  eighteen  towns,  in  which  seven- 
teen-eighteenths  of  the  personalty  was  intangible.  The 
proportion  shown  in  the  part  taxed  on  sworn  returns  in 
Ward  11  in  1894  was  less  than  one-twelfth  tangible.  At 
this  rate,  there  were  less  than  five  and  a  half  millions  of 
tangible  in  Ward  11,  instead  of  fourteen. 

The  estimate  of  my  associates,  so  far  as  stated  for  Boston, 
seems  to  be  pure  guess-work,  and  I  think  the  assessors  of 
that  city  will  not  admit  any  probability  that  the  tangible 
personalty  equals  the  intangible.  I  prefer  to  follow  data  so 
far  as  we  have  them,  and  accept  the  division  shown  in  the 


164  TAXATION  REPORT. 

sworn  returns  of  1894,  which,  though  of  course  not  to  be 
relied  on  as  an  accurate  reflection  of  the  truth,  seem  better 
than  guess-work.  These  returns  showed,  as  my  associates 
state,  $12,122,100  tangible  personalty  in  the  whole  city, 
against  $26,190,700  of  intangible, — a  proportion  of  about 
12  to  26.  As  to  Somerville,  which  they  omit,  it  seems  fair 
to  assume  that  one-third  is  intangible,  as  in  the  other  cities 
outside  of  Boston.  I  then  figure  the  intangible  personalty 
to  be  exempted  thus  :  — 

In  30  cities,  as  stated,      .        .        .'                .        .  $65,020,181 

In  Boston, 135,750,000 

In  Somerville, . 1,247,000 

In  all  towns,  as  stated, 83,792,441 


Total, $285,809,622 

The  average  tax  rate,  as  used  by  the  tax  commission  for 
assessing  corporate  property,  was  $15.10.  If  we  discount 
half  a  dollar  from  this  rate,  we  have  in  round  numbers,  as 
the  amount  of  taxes  given  up,  $4,175,000  per  annum. 

But  this  is  a  small  amount,  compared  with  the  loss  we 
should  suffer  in  potential  taxes,  — taxes  we  could  get  if  we 
would  amend  our  laws,  and  apply  only  that  reasonable  press- 
ure to  those  who  cheat  the  government  of  taxes  which  we 
should  use  if  they  were  not  so  influential. 

The  total  amount  of  personal  property  in  the  State,  which 
ought  to  be  reached  for  taxes,  must,  from  the  nature  of  the 
case,  be  a  matter  of  speculation.  That  which  escapes  is 
substantially  all  intangible,  which  ought  to  be  taxed  by  the 
assessors.  Massachusetts  has  probably  a  much  greater 
amount  of  investment  in  intangible  properties  than  any 
other  State  in  proportion  to  population. 

The  committee  on  taxation  of  the  Boston  Executive  Busi- 
ness Association,  of  which  Hon.  Jonathan  A.  Lane  was 
chairman,  reported:  "The  personal  property  of  both  the 
city  and  State,  which  under  the  law  is  subject  to  taxation, 
cannot  be  less  than  twice  the  value  of  the  real  estate.  Upon 
this  all  recent  writers  agree." 

The  real  estate  in  1896  being  2,040  millions  in  assessed 


INTANGIBLE   PERSONALTY.  %  165 

value,  the  personalty  would,  on  this  basis,  be  4,080  millions  ; 
and,  if  we  deduct  the  1,330  millions  which  the  Tax  Com- 
missioner reports  as  taxed  in  various  methods,  we  have 
2,750  millions  escaping. 

Robert  Giffen,  the  English  statistician,  estimated  the  land 
values  in  England  at  one-sixth  the  wealth,  on  which  basis 
we  should  infer  here  a  much  greater  escape  of  personalty. 

Richard  H.  Dana,  Esq.,  when  counsel  for  the  Anti  Double 
Taxation  League,  estimated  that  "foreign  bonds,  notes, 
mortgages,  etc.  [not  including  foreign  stocks] ,  would  proba- 
bly amount  to  at  least  $1,000,000,000."  Hon.  W.  B. 
Durant,  present  counsel,  estimates  the  foreign  stocks  at 
$700,000,000,  and  Hon.  Henry  Winn  at  $1,000,000,000; 
the  lowest  estimates  showing  1,700  millions  in  intangible 
foreign  investments  alone,  irrespective  of  domestic. 

The  comptroller  of  the  State  of  New  York,  in  his  report 
for  1896,  after  stating  that  "  since  the  act  imposing  a  tax  of 
one-eighth  of  one  per  cent,  for  the  privilege  of  organization 
was  passed  in  1886,  the  sum  of  $2,016,001,464  has  been 
invested  in  the  capital  of  corporations  "  in  that  State, — a 
sum  nearly  five  times  as  much  as  the  total  amount  of  per- 
sonalty on  the  tax  rolls,  —  and  stating  other  facts,  adds: 
"It  is  manifest  from  2,500  millions  to  3,000  millions  of 
personal  property  in  this  State  is  escaping  taxation  every 
year." 

The  probate  inventories,  1889-91,  cited  by  my  associates, 
show  95  millions  of  personalty  to  60  millions  of  realty, 
and  a  long  compilation  of  Essex  inventories  showed  a  far 
greater  proportion  of  personalty. 

In  view  of  the  current  of  opinion,  then,  it  seems  reasonable 
to  estimate  that  we  ought  to  tax  in  this  State  2,000  millions 
of  intangible  personalty  more  than  we  do.  As  our  total 
assessment,  real  and  personal,  was  $38,519,570  on  a  valua- 
tion of  $2,522,520,278,  this  amount,  added  to  the  assessors' 
rolls,  would  have  borne  more  than  17  millions  of  the  taxes, 
and  would  have  reduced  the  rate  to  about  $8.50. 

This  vast  annuity,  compounded  at  five  per  cent,  for  forty- 
four  years,  exceeds  all  the  assessors  find  to  tax  in  the  State. 


166  TAXATION  REPORT. 

To  exempt  intangible  properties,  then,  would  be  to  donate 
more  than  4  millions  a  year  of  actual  money  to  our  wealth- 
iest citizens,  to  abandon  our  just  claims  for  an  immense 
annuity  more,  and  to  impress  upon  our  people  the  convic- 
tion that  the  State  intends  to  extort  from  them  perpetual 
tribute  to  a  privileged  class. 

This  is  an  era  of  vast  public  expenditure,  the  net  debt  of 
our  cities  and  towns  having  gone  up  half  during  the  past 
seven  years,  in  spite  of  a  great  increase  in  taxes.  It  is  no 
time  to  let  anybody  off.  I  respectfully  urge,  then,  that  the 
true  policy  of  the  State  should  be  to  keep  the  $4,175,000 
annuity  we  now  get ;  to  add  to  it  $2,500,000  by  an  inherit- 
ance tax  if  we  can  ;  and  then  to  strengthen  our  laws  till  we  get 
enough  more  from  the  tax-dodging  class,  with  the  economies 
in  government  which  their  powerful  influence  will  enforce 
if  they  have  to  help  pay,  to  reduce  our  average  tax  rate 
below  one  per  cent.,  as  it  always  used  to  be  when  personal 
property  was  fairly  taxed.  Then  our  industries  would  be 
assisted,  the  security  holder  would  feel  the  tax  reasonable, 
and  the  farmer  w^ould  be  relieved. 

There  is  another  strong  economic  reason  why  notes  and 
bonds  should  be  taxed.  The  tax  they  pay  does  not  fall 
upon  business.  How  can  Massachusetts  industry  be  harmed 
by  levying  tribute  on  an  investment  in  Mexico  ?  When  a 
man  has  made  his  fortune  in  trade,  and  sells  out  his  stock  of 
goods,  he  takes  a  note.  He  is  no  longer  in  business  ;  and  to 
reduce  by  a  tax  his  income  from  interest  on  the  note  —  the 
tribute  that  business  pays  him  —  does  not  perceptibly  harm 
business.  It  is  far  different  from  the  tax  which  falls  into 
rent  on  the  store  or  factory.  Thus,  by  the  tax  on  accumu- 
lated capital,  have  the  burdens  on  our  industries  been 
relieved,  until,  in  spite  of  natural  disadvantages,  they  have 
outstripped  those  of  other  States.  They  are  perilled  by 
the  present  high  rates  which  our  relapses  from  the  ancient 
and  honest  policy  of  Massachusetts  have  created. 

The  statement  that  "you  cannot  tax  personal  property" 
is  best  answered  by  the  fact  that  Switzerland  taxes  personal 
property,  and  that  Massachusetts  formerly  taxed  such  prop- 


INTANGIBLE  PERSONALTY. 


167 


erty.  We  do  even  now  get  about  forty  per  cent,  of  our 
revenue  from  other  sources  than  realty.  In  former  times, 
when  the  proportion  of  personalty  to  realty  was  much  less 
than  now,  we  got  almost  as  much  from  it  as  from  realty. 
The  tax  rate  of  Boston  in  certain  years,  allowing  for  the 
system  of  half  valuation  to  reach  the  present  basis,  and 
the  percentage  derived  from  personalty  and  realty,  is  as 
follows  :  — 


YEABS. 

Tax  Rates. 

YEABS. 

Per  Cent, 
from 
Realty. 

Per  Cent, 
from 
Personalty. 

1822, 

$3.65 

1822, 

55.76 

44.24 

1832, 

4.10 

1865, 

54.22 

45.78 

1842, 

5.70 

1870, 

62.59 

37.41 

1852, 

6.40 

1875, 

70.40 

29.60 

1861, 

8.90 

188Q, 

68.40 

31.60 

1862, 

10.50 

1885, 

72.34 

27.66 

1872, 

11.70 

1894, 

76.18 

23.82 

1882, 

15.10 

What  bondholder  could  complain  at  such  taxes  as  were 
laid  in  Boston  prior  to  1861?  Taxation  of  corporate  per- 
sonalty by  another  plan,  adopted  in  1865,  reduced  the  ratio 
taxed  by  assessors;  and,  since  1881,  the  mortgage  exemp- 
tion law  has  had  a  vicious  effect,  not  alone  through  the 
natural  dropping  of  mortgages  from  the  lists,  but  by  attrac- 
tion of  considerable  sums  from  the  tax  rolls  into  that  form 
to  escape  taxation. 

The  average  tax  rate  of  the  Commonwealth  in  1861  was 
only  $8.29.  I  think  it  is  apparent  we  did  tax  chattels.  If 
our  personalty  were  as  well  taxed  as  formerly,  it  seems  to 
me  we  should  have  low  rates  now.  The  growth  of  wealth 
has,  I  believe,  substantially  kept  pace  with  the  growth  of 
reasonable  demand  for  expenditure. 

The  reason  why  we  cannot  tax  personalty  as  we  ought  is, 
I  think,  that  our  laws  are  lax.  They  are  less  rigid  than 
formerly,  when,  if  a  man  refused  a  statement,  he  was  sub- 
jected to  the  doom  of  the  assessors,  and  could  not  get  abate- 


168  TAXATION  REPORT. 

ment.  If,  hoping  that  the  assessor  would  not  discover  his 
properties,  he  took  the  risk  of  silence  and  lost  by  being 
over-taxed,  there  was  no  help  for  him.  Now  the  State  steps 
in  and  prevents  him  from  being  over-taxed  beyond  fifty  per 
cent.  The  doom  of  the  old  time  assessor,  who  cringed  to 
nobody  but  his  Maker,  was  an  effective  means  of  taxation. 

We  ought  to  compel  statements.  The  law  requires  them. 
Why  should  it  not  be  obeyed  ?  Every  man  owes  a  share  of 
his  income  to  the  government,  and  the  State  has  a  just  right 
to  such  a  disclosure  as  will  make  certain  what  that  share  is. 
The  statement  is  not  open  to  the  public.  It  cannot  be  ex- 
amined by  the  public,  except  by  order  of  court.  It  does 
not,  therefore,  unduly  disclose  a  man's  business.  Neither 
is  it  a  difficult  thing  to  make.  Some  of  the  largest  houses 
in  Boston  make  them. 

A  return  is  necessary  now,  because  the  corporation  and 
bank  tax  acts  and  the  savings  bank  tax  system  and  mortgage 
exemption  provide,  besides  government  bonds,  so  many 
classes  of  property  not  taxable  by  the  assessors  that  those 
officers  are  utterly  unable  to  tell  from  the  style  of  living  and 
repute  and  expenditure  of  a  man  whether  he  has  taxable 
properties  or  non-taxable.  With  sworn  statements  and 
proper  cross-examination  by  competent  and  honest  assessors, 
property  would  be  taxed  with  infinitely  more  justice  than 
now. 

Under  our  laws  there  is  little  difficulty  in  securing  in- 
formation from  a  poor  debtor  as  to  his  properties,  when  all 
are  called  for  by  the  creditor.  Why  should  there  be  in 
case  of  a  tax  payer,  when  only  one  and  a  half  per  cent,  is 
wanted  ? 

The  efficiency  of  returns  and  of  doomage  laws  —  that  is, 
laws  adding  heavily  to  the  taxes  if  returns  are  not  made  — 
in  securing  them  is  roughly  illustrated  by  the  census  data 
showing  the  percentage  of  increase  in  the  amount  of  personal 
property  reached  for  taxation  during  the  decade  1880-90  in 
three  States ;  Vermont  adopting  a  doomage  law  in  1880, 
New  Hampshire  in  1878  and  Pennsylvania  in  1885,  as  com- 


DOOMAGE  LAWS.  169 

pared  with  two  States  without  such  laws.     The  figures  are 
as  follows  (Census  Bulletin  192)  :  — 


Without  doomage  laws  :  - 

Massachusetts,       ........        16.97 

New  York,     .........         18.44 

With  doomage  laws  :  — 

New  Hampshire,  ........  203.04 

Vermont,        .........  245.89 

Pennsylvania,        ........  288.89 

The  Maine  Tax  Commission  gives  the  percentage  of  per- 
sonalty taxed,  as  compared  with  realty  in  three  States  with 
doomage  laws  and  three  without,  as  follows  :  — 


With  doomage  laws  :  - 

Ohio  ...........  30,5 

New  Hampshire,     ........  33.9 

Vermont,         .........  31.1 

Average,  .        .  ......        31.8 

Without  doomage  laws  :  — 

New  York,      .........  9.6 

Maryland,        .........  25.8 

Michigan,         .........  16.4 

Average,  .......  '  .        17  .  2 

The  complete  change  that  has  come  upon  the  taxation  of 
personalty  in  Vermont  through  the  more  stringent  law  re- 
quiring returns  is  well  shown  by  a  comparison  with  New 
York.  We  think  no  statistician  will  dispute  the  statement 
that  New  York  has  a  much  greater  percentage  of  personalty 
as  compared  to  realty  than  Vermont.  The  two  States  have 
laws  as  to  what  shall  be  taxable  much  alike.  Both  exempt 
foreign  stocks,  and  allow  deductions  from  tangible  property 
taxed  of  the  debts  of  its  owner.  In  1880  the  per  cent,  of 
personalty  taxed  in  Vermont  was  somewhat  greater  than  in 
New  York,  if  I  remember,  but  not  much.  But  in  1895,  in 


170  TAXATION  KEPORT. 

New  York,  as  compared  with  1896  in  Vermont,  the  percent- 
ages stand  as  follows  :  — 


Per  Cent,  taxed 
Personalty 
bears  to  Total. 

Realty. 

Vermont,   .        .        .        .     '   . 
New  York,         

27.8 

10.6 

72.2 

89.4 

If  we  could  divide  the  intangible  from  the  tangible,  we 
should  find  the  result  still  more  striking. 

We  cannot  doubt  that  the  Vermont  system  which  com- 
pels returns  brings  out  for  taxation  five  times  as  much  in- 
tangible personalty  in  proportion  to  the  total  as  that  of 
New  York.  Moreover,  our  tax  reformers  who  fill  the 
press  with  pleas  against  such  laws  find  a  chilling  reception 
in  Vermont. 

The  Maine  commission  of  1889  made  a  special  study  of 
the  effects  of  the  doomage  laws  of  Vermont  and  New  Hamp- 
shire, visiting  the  States.  Their  report  is  favorable  as  to 
their  efficiency  and  popularity  in  both  States.  Of  Vermont 
they  say :  — 

"  Contrary  to  what  we  had  been  led  to  believe,  we  found 
that  the  Vermont  grand  list  law  is  very  popular  among  the 
tax  payers.  We  interviewed  many  business  men,  and  con- 
sulted the  assessors  of  several  cities.  While  for  a  year  or 
two  the  prying  qualities  of  the  statute  were  somewhat  dis- 
tasteful, when  it  was  found  that  *  all  were  served  alike,'  and 
that  the  tax  rate  went  down  as  the  aggregate  valuation  of 
property  went  up,  the  law  was  accepted  and  acquiesced  in, 
as,  on  the  whole,  very  beneficial  to  the  State  at  large. 

< '  The  effect  of  the  grand  list  law  is  very  clearly  seen 
when  the  rates  of  State  taxation  before  and  after  its  passage 
are  compared.  For  the  three  years  immediately  preceding 
its  passage  the  rate  averaged  three  and  one-third  mills  on 
the  dollar,  while  for  the  three  years  succeeding  its  passage, 
and  before  the  corporation  tax  act  took  effect,  the  average 
rate  was  but  one  and  a  half  mills. 


DOOMAGE   LAWS.  171 

*  *  If  it  is  inquired,  '  Has  not  this  inquisitorial  and  oath- 
compelling  law  driven"  property  out  of  the  State  ? '  We  are 
able  to  reply  that  we  found  no  evidence  of  it.  We  made 
special  inquiry  as  to  this  point.  While  much  money  is 
being  invested  in  western  speculations,  —  in  which  particular 
Vermont  is  like  all  the  rest  of  New  England,  —  there  has 
been  no  loss  of  property  or  of  business,  so  far  as  we  could 
learn,  by  reason  of  the  new  system  of  taxation." 

This  was  nine  years  after  the  Vermont  act  was  passed. 
I  am  permitted  to  print  a  letter  from  Hon.  James  L.  Martin, 
ex-speaker  of  the  Vermont  House  of  Eepresentatives,  writ- 
ten in  1895,  showing  the  situation  six  years  later:  — 


BRATTLEBORO,  April  15,  1895. 
Hon.  HENRY  WINN. 

MY  DEAR  SIR  :  —  Yours  received.  First,  you  ask  whether  our 
tax  law  has  driven  property  out  of  the  State.  I  know  of  no  evi- 
dence tending  to  show  that  it  has.  I  am  quite  well  acquainted 
with  -the  business  interests  of  Vermont,  being  engaged  in  lumber, 
lime  and  granite  business,  as  well  as  my  profession,  which  brings 
me  in  touch  with  a  variety  of  business  affairs. 

You  doubtless  remember  that  when  our  law  was  enacted  I  was 
speaker,  and  made  up  the  committee  who  recommended  its  passage. 
I  have  therefore  had  an  interest  to  watch  its  effect  upon  the  State, 
and  have  done  so.  It  is  possible  there  may  have  been  some  busi- 
ness enterprises  that  would  have  located  in  Vermont  were  it  not 
for  this  law,  although  I  know  of  none ;  but  I  do  not  believe  that 
there  has  been  an  established  industry  which  has  left  the  State  on 
account  of  it,  and  certainly  none  worth  keeping. 

Second.  You  ask  whether  it  has  caused  any  loss  of  business. 
To  this  I  answer,  in  my  opinion,  no. 

Third.     Whether  it  is  not  generally  popular.     It  certainly  is. 
I  doubt  whether  there  is  a  town  in  the  State  that  would  elect  a 
representative  opposed  to  the  law,  if  made  an  issue. 
I  am  yours  very  truly, 

JAMES  L.  MARTIN. 


I  am  sanguine  in  the  belief  that,  if  all  the  facts  could  be 
got  to  the  people  of  this  State,  there  is  not  a  town  that 


172  TAXATION  REPORT. 

would  not  vote  for  more  stringent  laws  to  reach  intangible 
property. 

In  my  opinion,  the  reason  why  our  system  has  become  so 
enfeebled  is  :  — 

First.  Because  a  much  greater  amount  of  intangible 
property  has  accumulated  since  the  war  than  existed  here 
before  the  war,  rendering  the  taxation  of  personalty  more 
difficult  and  proper  reinforcement  of  the  law  necessary. 

Second.  On  account  of  its  amount,  the  holders  of  this 
class  of  property  are  more  numerous  and  influential  than 
formerly.  A  certain  element  among  them  are  thoroughly 
organized,  maintain  bureaus  to  present  arguments  favorable 
to  their  cause,  fill  the  press  with  plated  matter,  and  employ 
able  counsel  to  oppose  propositions  for  more  stringent  laws 
who  say,  at  the  end  of  each  success,  "You  cannot  tax 
personalty;  therefore,  it  should  be  exempted."  On  the 
side  of  equal  taxation,  there  is  no  organization  and  no 
money. 

Third.  The  press  has,  with  rare  exceptions,  been  enlisted 
with  the  stock  and  bond  holders  in  their  contests  for  ex- 
emption. The  other  side  does  not  appear  except  in  occa- 
sional communications.  Propositions  of  exemption  in  1896, 
for  example,  supported  by  the  ablest  counsel,  by  almost  all 
the  business  organizations,  and  with  newspaper  matter 
scattered  broadcast  through  the  State,  were  thrown  out  by 
the  unanimous  vote  of  the  legislative  committees ;  but  the 
public  was  not  informed  through  the  press  as  to  the  con- 
siderations and  objections  which  accomplished  this  result, 
nor  even  who  presented  them.  The  newspapers  and  men 
of  vast  wealth  can  reach  the  public,  while  the  propositions  of 
those  who  favor  more  stringent  taxation  are  hardly  known, 
and  do  not  receive  sufficient  publicity  to  carry  them. 

Fourth.  The  personalty  tax  roll  languishes,  because  of 
the  passage  of  the  mortgage-exemption  law,  which  operates 
to  attract  properties  out  of  our  lists  and  into  mortgages  to 
secure  exemption. 


MORTGAGES.  173 


MORTGAGE  EXEMPTION. 

Multitudes  of  debts  are,  I  believe,  secured  by  mortgage, 
not  for  security,  but  to  avoid  the  tax.  Tax  dodgers  who 
held  mortgages  were  willing  to  exchange  with  tax  payers 
who  held  stocks  and  bonds,  because  they  could  dodge  on 
these  as  well  as  on  the  mortgages.  The  influx  into  mort- 
gages from  the  capital  of  those  who  wish  to  escape  taxes 
has  not  so  far  exceeded  the  outgo  from  mortgages  of  foreign 
capital  and  capital  of  tax  dodgers,  which  could  go  out  of 
mortgages  without  having  to  assume  a  tax,  as  to  oversupply 
the  demand  and  reduce  the  interest  rates  beyond  what  they 
would  have  fallen  from  the  universal  decline  of  interest 
without  any  such  law.  The  borrower,  who  was  the  only 
man  who  could  be  said  to  suffer  from  the  so-called  double 
tax,  has  received  no  benefit  from  the  law,  and  statistics  of 
all  new  mortgages  recorded  in  the  State  during  certain 
periods  show  this.* 

I  recommend  a  repeal  of  this  exemption,  as  to  future 
mortgages ;  and  as  to  present  mortgages,  so  far  as  borrow- 
ers, who  have  covenanted  to  pay  the  lender's  taxes  can  be 
protected.  Such  covenants  should  be  prohibited.  The 
principle  already  quoted,  stated  by  my  associates,  that  the  seepages*. 
international  money  market  determines  the  rate  of  interest 
of  securities,  and  holders  of  them  cannot  shift  the  taxes 
on  them  by  demanding  higher  rates,  will  help  defend  the 
borrowers  against  any  attempt  to  charge  them  the  mortgage 
tax,  if  reimposed. 

The  argument  of  my  associates,  that  farmers  have  not  got 
the  benefits  of  reduced  rates  through  this  law,  because  their 
farms  have  declined  in  value  and  become  a  poorer  security, 
does  not  impress  me.  I  do  not  find  from  the  statistics  that 
any  other  class  has  reaped  such  benefits.  Such  a  cause  may 
prevent  some  part  of  the  decline  which  would  have  come 
from  universal  causes,  but  it  cannot  be  set  up  to  explain  the 

*  Tables  showing  the  comparative  decline  in  the  interest  rates  on  mortgages  and 
on  other  securities  between  1880,  the  year  before  the  passage  of  the  law,  and  1889 
will  be  found  in  the  Appendix . 


174  TAXATION  REPORT. 

failure  of  a  decline  due  to  mortgage  exemption  until  it  is 
proved  that  others  not  farmers  have  realized  such  a  benefit. 
The  test  whether  the  mortgage  rate  has  declined  has  always 
been  made  with  new  mortgages,  and  in  making  them  the 
lender  looks  out  for  his  security  and  lends  less  if  the  prop- 
erty is  worth  less. 

Neither  does  the  California  example  cited  by  my  associ- 
ates modify  my  opinion.  The  law  there  is  made  as  much 
in  the  interest  of  the  money  lender  as  here.  The  borrower, 
if  I  understand  them,  is  obliged  to  state  who  is  the  mort- 
gagee, and  the  mortgagee  must  at  all  events  pay.  Neither 
a  New  York  man  nor  a  California  tax  dodger  can,  therefore, 
lend  on  a  California  mortgage  without  assuming  a  new  Cali- 
fornia tax.  He  can  get  the  international  interest  rate  with- 
out paying  any  such  tax,  and  so  he  will  not  lend  on  the 
California  mortgage  without  the  borrower  will  assume  the 
tax,  as  we  do  here,  or  give  him  enough  more  interest,  as 
they  do  there,  so  he  can  get  the  international  rate  without 
reduction.  But  if  mortgages  are  taxed  by  general  law,  and 
if  the  borrower  is  left  free  to  get  his  money  where  he  can, 
irrespective  of  the  question  whether  the  lender  pays  a  tax  or 
not,  he  can  borrow  of  the  New  York  man,  or  of  the  Califor- 
nia tax  dodger  or  exempt,  at  the  international  interest  rate, 
and  the  California  lender  who  is  taxed  under  the  general  law 
to  tax  mortgages  cannot  make  him  pay  any  more  because  he 
happens  himself  to  be  taxed.  If  he  tries  to  do  so,  the  bor- 
rower will  get  his  money  from  the  other  lenders,  who  bear 
no  tax  in  California.  And  the  extra  interest  got  in  that 
State  does  not  indicate  either  that  the  borrower  bore  the 
tax  under  the  old  law,  or  would,  if  it  were  restored. 

This  California  law  is  in  effect  the  same  as  ours.  Both 
put  the  borrower  in  such  a  corner,  by  denying  him  the 
privilege  of  borrowing  from  anybody  who  does  not  bear  a 
tax,  without  assuming  it  himself,  that  he  is  obliged  to  bear 
any  lender's  tax,  which  he  can  afford  to  do  because  he  is  ex- 
cused from  an  equivalent  tax  on  his  land,  and  the  lender 
goes  scot  free. 


MORTGAGES.  175 

The  theory  of  the  defenders  of  this  law  seems  to  be  that 
if  the  borrower  paid  a  tax  on  the  mortgaged  land  and  the 
lender  a  tax  on  the  mortgage  it  constituted  double  taxation 
and  that  this  would  be  cured  by  abating  one  tax  no  matter 
which  got  the  benefit  of  the  abatement. 

The  fallacy  underlying  this  use  of  the  catchword  * i  double 
taxation "  is  fully  exposed  in  the  following  quotation : 
"  Mortgages  were  exempted  on  this  catchword  in  1881, 
fugued  by  the  money  lender  and  the  press.  It  is  hoped  that 
it  will  prove  a  good  enough  Morgan  to  carry  foreign  stocks 
also.  In  the  case  of  mortgages,  it  was  the  borrower  alone 
who  could  complain  of  double  taxation.  When  Harry  owns 
a  farm  and  hires  the  penniless  Tom,  it  is  Harry  who  owes 
the  taxes,  so  far  as  that  couplet  is  concerned.  If,  now, 
Harry  sells  the  farm  to  Tom  for  a  note  and  mortgage,  he 
does  not  impoverish  himself  in  the  least  by  the  even  bargain. 
If  he  did,  he  would  not  make  it.  Harry,  therefore,  owes  a 
full  tax  as  much  as  he  did  before.  The  mortgage,  therefore 
(Harry's  property) ,  ought  certainly  to  be  fully  taxed.  As 
to  Tom,  if  the  farm  is  taxed  also,  he  is  obliged  to  pay  taxes 
on  land,  the  chief  profits  of  which  go  to  another  in  the  form 
of  interest.  When  farm  and  mortgage  were  both  taxed,  Tom 
had  a  grievance,  Harry  had  none.  But  Harry  saw  how 
easily  the  untutored  mind  was  confused  on  this  subject,  and 
he  said  to  himself,  *  If  I  cry  * <  double  taxation "  lustily 
enough,  I  may  carry  off  the  comfits.  I'll  keep  Tom  still  by 
telling  him  I'll  divide  by  reducing  the  interest.'  Harry  then 
sang  to  the  General  Court,  with  such  vigorous  grief,  the  song, 
*  Poor  Tom,  how  he  suffers  ;  he  is  double  taxed ;  therefore  let 
me  off,' that  the  tender-hearted  Legislature,  with  the  skill  of 
a  surgeon  who  saws  off  the  wrong  leg,  passed  a  law  exempt- 
ing not  the  sufferer,  but  the  singer.  Poor  Tom  pays  all  the 
taxes  he  did  before  and  one  tax  more,  namely,  his  share  of  the 
tax  that  Harry  gets  rid  of.  He  has  not  through  this  law  got 
enough  interest  reduction  to  meet  that  one  new  tax  he 
shoulders  that  Harry  may  go  scot  free.  Harry  has  reduced 
the  interest  charge,  but,  as  we  will  show  when  we  discuss 


176  TAXATION  KEPORT. 

interest,  not  so  fast  as  he  did  before  the  exemption,  not  so 
much  as  other  money  lenders  without  any  law  to  bring  them 
down,  not  any  more  than  he  would  have  been  obliged  to  re- 
duce it  if  he  still  paid  taxes.  Massachusetts  has  subsidized 
Harry  and  his  confreres  by  almost  forty  millions,  but  all  the 
borrowing  Toms  together  have  not  got  from  it  forty  cents 
net  yet.  The  whole  State  is  double  taxed  by  this  act  now, 
but  it  has  relieved  no  double  taxation  at  all."  (ff.  Winn, 
—  Massachusetts  Tax  Problems,  page  37.) 

Professor  Seligman  says  :  "  Double  taxation  is  not  always 
wrong.  It  is  only  unjust  when  one  tax  payer  is  assessed 
twice,  while  another,  in  substantially  the  same  class,  is 
assessed  only  once." 

The  commission  of  eighteen  hundred  and  seventy-five 
(pages  89-90)  say  :  — 

*  *  Many  still  claim  that  the  holder  of  the  mortgage  ought 
to  be  exempt  from  taxation  on  it,  because  the  mortgagor, 
they  affirm,  really  pays  both  his  own  tax  and  that  of  the 
mortgagee,  — the  former  to  the  collector  directly,  the  latter 
indirectly,  in  the  increased  rate  of  interest ;  and  because, 
also,  if  the  tax  should  be  remitted  to  the  mortgagee,  the 
mortgagor  would  receive  the  actual  relief,  in  the  rate  of  in- 
terest diminished  by  an  amount  equal  to  the  tax. 

"  These  positions  are  sufficiently  sound  to  make  it  im- 
portant to  remember  them,  if  any  plan  of  exemption  of  the 
mortgage  rather  than  of  mortgaged  estates,  and  should 
apply  only  to  future  mortgages,  or  to  those  whose  holders 
should  remit  an  amount  of  interest  equal  to  the  tax.  But  it 
is  a  mistake  to  suppose  that,  were  the  mortgage  exempted 
in  the  hands  of  its  holder,  the  owner  of  the  land  would 
thereby  be  relieved  by  a  corresponding  diminution  of  inter- 
est. The  rate  of  interest  upon  mortgages  depends  upon 
many  other  things  more  closely  than  the  rate  of  taxation. 
The  law  of  supply  and  demand  respecting  money  at  a  given 
time,  the  security  with  which  investments  can  be  made,  the 
general  conditions  of  business  and  state  of  affairs  in  the 
country,  these,  and  not  the  rate  of  taxation,  will  determine 
the  rate  of  interest.  Rates  of  taxation  vary  largely  in  dif- 


INDIRECT  TAXATION.  177 

ferent  portions  of  the  State.  In  some  towns  they  are  per- 
manently very  low,  and  in  others  high.  In  many  towns 
which  have  permanently  low  taxes  capitalists  are  residents, 
who  make  loans  upon  mortgages.  There  is  no  reasonable 
probability  that  higher  taxes  will  prevail  in  these  places, 
and  yet  there  is  no  evidence  that  mortgagees  residing  in 
such  towns  make  loans  upon  less  interest  than  is  obtained 
by  capitalists  residing  in  places  where  the  taxes  are  high 
and  likely  to  remain  so.  Nor  have  any  instances  been 
pointed  out  in  which  mortgagees,  upon  removing  from  a 
place  in  which  they  have  been  compelled  to  pay  high  taxes 
to  some  more  favored  town,  have  called  to  them  their  debt- 
ors, and  bade  them  write  down  a  lesser  rate  of  interest  for 
the  future.  Neither  do  savings  banks,  which  are  taxed  only 
three-fourths  of  one  per  cent,  on  deposits  invested  in  mort- 
gages, lend  at  less  rates  than  individuals  who  pay  over  one 
and  one  half  per  cent.  ;  nor  do  mutual  insurance  companies, 
who  pay  no  tax  whatever,  demand  less  than  savings  banks. 
On  the  other  hand,  the  interest  paid  upon  mortgages  is 
substantially  the  same  throughout  the  State,  depending 
more  upon  the  kind  of  security  and  the  demand  for  money 
than  upon  the  rate  of  taxation." 

Another  reason  of  the  gravest  importance  why  intangible 
properties  ought  to  be  taxed  is  that  their  exemption  seems 
to  subvert  the  foundations  of  taxation  according  to  ability 
much  farther  than  at  first  appears. 

It  is  claimed  that  exemptions  opening  an  avenue  through 
which  capital  can  escape  taxes  by  investment  in  the  ex- 
empted properties  not  only  transfers  to  real  estate  the 
taxes  lost  by  the  exemptions,  and  thus  compels  tenants  of 
houses  to  pay  a  greater  share  of  taxes  to  make  up  the 
deficit,  but  transfers  also  to  the  tenants  a  large  share  of 
the  taxes  on  the  buildings  which  the  owners  previously 
bore.  The  general  principle  is  thus  stated  by  Mr.  Winn  :  — 

*  *  The  chief  evil  of  this  is  not  the  obvious  one  that  the 
poor  are  taxed  to  make  up  the  deficit,  but  it  is  that  an 
avenue  of  escape  is  open ;  for,  when  sufficiently  open,  the 
general  rule  is  that  taxes  fall  on  the  consumer  only,  with 


178  TAXATION  REPORT. 

certain  exceptions,  and  not  on  wealth  as  wealth.  Because, 
when  capital  has  a  door  opened  by  favor  through  which  it 
can  freely  escape  taxation,  all  that  stays  under  exacts  the 
tax,  or  at  least  a  great  part  of  it,  from  the  consumer  for 
whose  benefit  it  remains. 

4 'When  chattels  [personal]  are  free  the  tax  falls  appar- 
ently on  real  estate  .  .  .  We  cannot  help  believing  that 
the  part  arising  from  site  value  is,  for  reasons  stated,  paid 
by  the  landlord,  but  the  part  arising  from  structures  and 
other  improvement  value  is  paid  by  the  tenant :  and  that, 
however  the  mutations  of  demand  and  supply  may  vary  this 
proportion,  the  division  will  constantly  tend  to  that  line. 

'  *  For  the  tenant  of  a  building  cannot  avoid  a  higher  rent 
charge  except  as  other  capital  is  tempted  into  buildings  to 
compete  for  rent.  And  if  that  capital  is,  or  may  be,  ex- 
empt, it  will  not  flow  into  structures  without  charging 
enough  extra  in  rent  to  meet  the  tax  it  was  before  free 
from.  Hence  the  tenant  has  no  relief;  but  when  chattels 
are  free  he  must  pay  the  landlord's  tax. 

' « On  the  other  hand,  if  all  property  is  taxed  the  land- 
lord cannot  exact  his  tax  from  his  tenant  by  increased  rent 
for  [if  he  could]  taxed  chattel  capital  would  flow  into 
houses  to  gain  this  exemption."  Property  in  Land  (1887),, 
p.  71. 

Under  the  ancient  and  honest  Massachusetts  system,  if 
this  reasoning  be  correct,  the  owner  of  a  house  could  not 
charge  his  taxes  on  it  to  his  tenant  by  increased  rent. 
But,  if  the  plan  of  exemption  proposed  by  my  associates 
succeeds,  the  taxes  on  houses  will  be  shifted  to  the  tenants. 
This  would  transfer  a  vast  body  of  taxes  from  those  who 
have  property  and  ought  to  bear  them  to  those  tenants  who 
very  often  have  no  taxable  property.  Through  rents,  as 
my  associates  agree,  working  men  pay  taxes.  I  think  their 
policy  of  exemption  would  vastly  enhance  those  taxes,  and 
change  the  nature  of  our  taxes  largely  from  direct  to  indi- 
rect, which  fall  without  any  regard  to  ability  to  pay. 

The  believers  in  the  single  tax  claim  that  they  desire  to 
relieve  poverty.  But  when  they  help  men  to  escape  taxes 


STATE   ASSESSORS.  179 

on  stocks,  notes  and  bonds,  .the  peculiar  property  of  the  rich, 
they  increase  the  burdens  of  the  poor.  They  will  lose  the 
help  of  this  wealthy  class  when  the  latter  get  their  purpose 
accomplished, '  and  can  go  no  farther;  therefore,  if  they 
wish  to  abolish  poverty,  they  should  begin  by  exempting 
the  houses  which  the  poor  occupy,  and  insist  that,  until 
that  is  done,  notes,  stocks  and  bonds,  shall  be  taxed. 

Our  Constitution  was  intended  to  conserve  our  ancient 
system,  and  commands  proportional,  that  is,  equal,  taxa- 
tion. How  far  by  a  system  of  exemptions  it  will  permit 
this  equality  to  be  broken  down  is  a  matter  of  doubt.  The 
tax  commission  of  1874,  one  member  of  which  is  now  of 
the  supreme  judicial  court,  say:  "It  is  by  no  means  clear 
that  under  the  Constitution  of  the  State  it  would  be  possible 
for  the  Legislature  to  exempt  personal  property  from  taxa- 
tion" (report,  page  19),  —  meaning,  of  course,  personal 
property  generally.  To  exempt  all  intangible  properties 
would  clearly  work  the  substantial  abrogation  of  this  clause 
of  the  Constitution. 

STATE  ASSESSMENT. 

Believing  that  in  matters  of  taxation  a  conservative  policy 
is  best,  I  recommend  no  new  departure  from  the  ancient 
policy  of  the  State,  "to  tax  all  men  according  to  the 
measure  of  their  ability,"  but  rather  to  complete  the  system 
now  in  operation  by  such  amendments  as  shall  adapt  our 
policy  to  the  more  complicated  conditions  of  our  time. 

If  time  could  have  been  permitted,  the  object  here  pro- 
posed could  have  been  best  accomplished  by  the  suggestion 
of  separate  amendments  to  existing  statutes.  The  haste 
with  which  this  report  must  be  closed  precludes  such  an 
exhaustive  work. 

In  1890  the  Hon.  Henry  Winn  suggested  a  plan  of  tax 
reform  embodied  in  a  bill  that  received  the  approval  of  many 
of  the  best  experts  in  questions  of  taxation.  This  plan 
meets  with  my  heartiest  endorsement,  and  I  therefore 
recommend  it,  as  embodied  in  the  bill  given  in  the  Ap- 
pendix to  this  report. 


180  TAXATION  REPORT. 

It  provides  for  a  tax  on  personal  property  at  a  uniform 
rate  through  the  Commonwealth,  laid  by  the  Tax  Com- 
missioner with  the  aid  of  supervisors  and  State  assessors, 
any  of  whom  may  be  removed  by  the  Tax  Commissioner. 
This  officer  is  to  divide  the  State  into  twenty  tax  districts, 
each  composed  of  two  adjoining  senatorial  districts,  and  is 
annually,  subject  to  the  approval  of  the  governor  and 
council,  to  appoint  one  supervisor  for  each  district,  at  a 
salary  of  $2,500  per  annum,  and  one  State  assessor  for  each 
city  and  town,  whose  pay  shall  be  twenty  per  cent,  more 
than  that  of  the  other  assessors,  but  not  less  than  three 
dollars  and  a  half  a  day,  and  who  is  to  be  chairman  of  the 
board.  All  these  officers  are  to  be  paid  by  the  State. 

The  State  assessor  is  to  have  full  control  and  charge  of 
the  assessment  of  personal  property  in  his  city  or  town, 
subject  to  his  superior  officers.  To  accomplish  this,  he  is 
to  have  full  power  to  require  such  assistance  from  the  local 
board  as  he  may  need. 

It  has  been  thought  more  natural  and  practicable  to  make 
the  administrative  department  at  its  foundation  a  part  of 
our  present  system,  maintaining  our  old  methods  as  near  as 
may  be.  The  other  assessors,  by  reason  of  the  share  their 
municipalities  are  to  receive,  will,  it  is  thought,  act  in  har- 
mony and  promote  the  work. 

The  present  law  as  to  sworn  returns  is  to  be  enforced  un- 
der a  penalty  of  doomage  to  the  extent  of  doubling  the 
personal  property  tax  if  returns  are  not  made.  The  law 
still  leaves  everybody  practically  free  to  assess  himself,  if 
he  will. 

Revision  of  local  tax  lists  is  entrusted  to  the  supervisors 
and  the  Tax  Commissioner.  Abatements  are  to  be  made  by 
the  local  State  assessors  and  supervisors,  but  relief  from 
the  administrative  machine  is  given,  if  its  action  is  felt 
oppressive,  in  an  appeal  to  the  superior  court. 

The  taxes  are  to  be  collected  in  the  usual  way.  Two- 
thirds  of  the  proceeds,  less  abatements,  are  to  be  paid  over 
to  the  State  treasurer,  and  by  him  distributed  to  the  various 


STATE  ASSESSORS.  .  181 

cities  and  towns,  one-half  in  proportion  to  their  respective 
real  estate  valuations  and  the  remainder  in  proportion  to 
population.  The  other  third  remains  with  the  municipality 
where  it  is  collected. 

The  rate  of  the  tax  is  to  be  the  average  rate  collected  on 
real  estate  through  the  State  in  the  year  before.  Both  the 
rate  and  distribution  will,  of  course,  be  easily  changed,  as 
experience  may  show  the  equity. 

During  the  intervals  of  administrative  employment  in  as- 
sessment and  abatement  the  supervisors  are  to  be  engaged  in 
the  discovery  of  personal  property  concealed  from  the  assess- 
ors and  the  detection  and  punishment  of  those  making  false 
returns,  and  other  services  in  the  direction  of  the  better 
assessment  of  property. 

The  purposes  of  the  plan  are  manifest.  First,  it  centers 
in  one  responsible  head  the  assessment  with  all  the  powers 
of  concentrated  authority,  somewhat  according  to  the  recent 
tendency  to  confer  power  on  mayors  and  hold  them  respon- 
sible. The  people  will  know  exactly  whom  to  blame  if 
abuses  in  assessment  like  those  which  disgrace  Chicago  shall 
appear  here.  Nowhere  is  a  more  efficient  administration 
needed  than  in  this  field,  as  our  experience  shows,  and  ac- 
cordingly the  bill  provides  an  organization  that  will  act  with 
almost  military  precision  and  effectiveness,  but  affords  the 
citizen  an  absolute  protection  against  any  arbitrary  action  in 
his  right  of  self-assessment  and  of  appeal  to  a  completely 
independent  tribunal,  — the  superior  court. 

It  next  removes  the  assessor,  as  far  as  possible,  from  the 
influence  and  power  of  the  wealth  to  be  assessed.  He  now 
knows  that  in  many  cases  the  people  do  not  and  cannot  con- 
sider the  details  of  assessment  and  justify  correct  action  on 
his  part,  but  that  the  influential  men  whom  he  has  brought 
to  the  performance  of  their  duty  to  the  government  will  be 
able  to  deprive  him  of  his  place.  He  will  no  longer  feel 
that  his  appointment  depends  upon  that  influence  or  power ; 
but,  on  the  other  hand,  if  he  yields  to  it  and  breaks  his 
oath,  his  path  is  out,  not  in. 


182  .  TAXATION  REPORT. 

It  is  presumed  the  State  assessor  will  be  appointed  from 
among  the  citizens  of  the  town  or  city  he  is  to  serve,  be- 
cause he  is  better  acquainted,  but  this  is  not  imperative, 
since  in  some  places  satisfactory  men,  independent  of  local 
affiliations  that  may  control,  may  not  be  found. 

Liberal  compensation  is  provided  for  the  assessing  offi- 
cers, that  they  may  be  free  from  the  pinch  that  might  yield 
to  corrupt  persuasion,  and  that  strong  men  may  be  secured. 

The  inevitable  result  of  the  plan  will  be  considerable  per- 
manency of  tenure  in  office,  though  the  necessity  of  annual 
appointment  will  induce  good  work.  The  same  appointing 
power  will  appoint  the  same  man  if  found  worthy,  and  es- 
pecially the  same  supervisors. 

This  ensures  through  the  State  a  trained  body  of  intelli- 
gent assessors,  who  will,  as  Mr.  Hills  did  in  Boston,  acquire 
a  great  stock  of  information  about  men  to  be  assessed,  and 
who  will  be  perfectly  informed  as  to  the  laws  and  best  meth- 
ods of  assessment.  The  general  rules  which  will  be  issued 
by  the  Tax  Commissioner,  and  the  constant  supervision  by 
his  assistants  will  secure  uniformity.  Abuses  will  soon  be 
discovered  and  rectified.  No  longer  will  the  municipalities 
be  plagued  by  the  errors  of  inexperienced  assessors.  Never 
again  will  there  be  such  assessment  as  that  of  the  shares  of 
Boott  Mills  stock  at  $3  in  Newton  and  Pepperell  and  $860 
in  Medford. 

But  these  are  not  the  greatest  advantages.  The  stock  and 
bond  holder  would  find  himself  taxed  by  the  same  hand 
at  the  same  rate,  if  he  lived  at  the  sea-shore  town  where 
he  had  gone  to  escape,  as  he  would  be  in  Boston.  There 
was  transferred  from  the  rolls  of  Boston  to  such  places 
$14,541,100  in  the  period  from  1869  to  1875  inclusive. 
Seven-eighths  of  this,  in  the  judgment  of  the  assessors, 
went  to  escape  taxation.  Comparatively  little  was  after- 
wards taxed.  It  would  abolish  tax-dodging  retreats. 

The  bargaining,  spoken  and  unspoken,  to  favor  men  in 
assessment  and  get  them  from  one  place  to  another  for  the 
sake  of  adding  to  the  respective  valuations  and  building  up 


DISTRIBUTION   OF  UNIFORM  TAX.  183 

localities,  would  cease.  It  would  not  pass  the  supervisors 
and  Tax  Commissioner. 

Threats,  against  which  the  assessors  are  now  powerless, 
to  leave  town  if  fairly  taxed,  would  lose  their  terror. 

Fears  that  capital  would  leave  the  State  to  escape  taxation 
are  substantially  groundless.  Men  reach  their  fortunes  late 
enough  in  life  so  that  they  will  not  leave  their  old  friends, 
their  clubs,  their  churches  and  established  homes  for  the 
sake  of  cheating  the  government  of  its  due.  They  will  go 
to  the  sea-coast  suburbs  in  easy  reach  of  Boston  and  live  in 
the  city  in  winter,  but  will  not  depart  from  Massachusetts. 
If  some  go,  ten  dollars  of  active  capital,  attracted  by  the 
low  tax  rate  we  can  have,  will  come  into  industries  that 
build  factories  and  employ  our  people,  to  one  that  will 
depart. 

But  the  crowning  advantage  would  come  from  the  increase 
of  property  we  should  tax  by  reason  of  the  sworn  returns  ex- 
acted by  doomage.  The  data  of  States  already  cited  proves 
beyond  cavil  that  the  increase  would  come.  In  Pennsyl- 
vania a  doomage  of  fifty  per  cent,  increased  the  intangible 
personalty  taxed  from  $145,286,764  in  1885  to  $622,136,295 
in  1895  in  the  State  ;  and  in  Philadelphia,  a  city  which  com- 
petent judges  say  has  far  less  intangible  than  Boston,  from 
$95,071,724  to  $309,828,762. 

The  division  proposed  is  thought  to  do  justice  even  to  the 
tax-dodging  places.  The  claims  of  that  community  where 
the  tax  payer  has  money  spent  for  his  advantage  and  owes 
his  contribution  to  society  are  strong.  They  yield  only  to 
the  great  public  necessity  of  establishing  a  system  of  just 
and  equal  taxation.  It  is  not  well  to  inaugurate  in  Massa- 
chusetts a  practice  by  which  one  community  is  to  spend  and 
look  to  others  to  pay.  It  is  no  better  than  the  modern  fad 
of  taxing  one  man  to  build  up  the  business  of  another.  And, 
if  we  are  to  be  divided  up  into  greedy  communities,  each  try- 
ing to  live  off  the  other  by  forcing  contributions,  or  if  one 
class  is  to  seek  its  own  aggrandizement  by  log-rolling  with 
another  to  give  and  take  advantages  carried  through  combi- 


OF  TBK 

UNIVERSITY 


184  TAXATION  REPORT. 

nation  at  the  expense  of  the  community  at  large,  the  days 
of  anarchy  are  near. 

But  there  are,  I  believe,  in  certain  sections  great  accumu- 
lations of  wealth,  neither  taxed  nor  shown.  If  brought  out, 
the  result  would  simply  be  that  the  tax  rate  would  go  so  low 
in  the  places  where  it  is  that  tax  escape  would  come  in  that 
direction.  It  is  not  just  that  they  should  escape  contribu- 
tion. Such  a  division  of  the  proceeds  of  taxation  should 
be  made  as  will  stop  the  huddling  of  tax  dodgers  to  secure 
escape  by  a  low  rate  if  taxed  by  sworn  returns  exacted.  It 
will  be  better  for  the  very  towns  they  live  in,  if  accompanied 
by  laws  effective  enough  to  increase  even  their  own  revenues 
in  spite  of  the  division  of  the  revenue  from  personalty.  It 
is  not  division  of  revenue  that  this  plan  aims  at,  but  effective 
laws  and  only  such  division  of  revenue  as  must  be  made  to 
secure  just  taxation.  Division  without  the  effective  laws  is 
unjust. 

How  far  the  retention  of  one-third,  and  the  conservative 
return  of  one-third,  based  on  realty  value,  and  the  more 
liberal  provision  of  one-third  to  population,  will  make  a 
right  distribution  of  the  surplus  to  accomplish  the  object, 
it  is  hard  to  tell.  Some  plan  must  be  tried,  and,  if  wrong, 
experience  will  soon  show  how  to  correct. 

The  division  will  bring  relief  to  the  farming  towns,  and 
much  more  justly  than  division  of  the  corporation  surplus 
tax,  which  takes  from  the  places  where  owners  live  near 
their  factories  and  help  pay  the  attendant  public  charges,  or 
where  they  receive  their  public  benefits. 

I  do  not  intend  to  deny  that  there  are  public  functions  to 
be  performed  by  the  State  for  all  its  people.  They  need 
not  be  here  defined.  But  public  charges  should  be  paid  as 
nearly  as  may  be  by  those  who  vote  them.  The  advantages 
this  method  will  incidentally  afford  the  farming  towns  seems 
better  based  in  reason  than  those  suggested  by  my  associates. 
First,  the  receipts  are  not  to  be  increased  by  the  vote  of  any 
community  that  gets  them,  as  would  occur  if  counties  were 
allowed  to  spend  at  State  cost.  Next,  it  is  plain,  from  the 


DISTRIBUTION   OF   UNIFORM  TAX.  185 

data  secured  by  my  associates,  that  the  farming  towns  do  not 
tax  their  notes  and  bonds.  There  is  no  sense  in  their  ask- 
ing aid  to  let  off  their  rich  men.  Places  appear  in  the  list 
where  only  hundreds  of  dollars  are  taxed,  when  tens  and 
even  hundreds  of  thousands  exist.  It  was  in  one  of  these 
towns  the  untaxed  nest  egg  of  $864,000  was  found.  My 
plan  first  taxes  the  rich  man  in  these  towns,  and,  if  there  is 
a  deficit  afterwards,  renders  help.  Third,  it  replaces  the 
revenue  taken  to  the  towns  who  pay  it,  not  by  double  taxing 
a  class,  but  by  taking  simply  the  public  due  from  those  who, 
of  all  people,  ought  to  pay  it. 

Respectfully  submitted, 

GEORGE  EDWIN  McNEILL. 


APPENDIX 


[Bill  proposed  by  the  Majority  of  the  Commission.] 


APPENDIX  I.     [A] 


0f 


AN    ACT    IMPOSING    A    TAX    ON    LEGACIES,    SUCCESSIONS 
AND    CERTAIN   OTHER  TRANSFERS. 

Be  it  enacted,  etc.,  as  follows: 

1  SECTION  1 .     A  tax  of  five  per  cent,  of  its  clear  market  value  shall 

2  be  imposed  upon  the  transfer  of   any  property,  or  interest   therein, 

3  whether  corporeal  or  incorporeal,  of  the  value  of  two  hundred  dollars 

4  or  more,  in  trust  or  otherwise,  in  the  following  cases :  — 

5  (1.)     When  the  transfer  is  by  will  or  by  the  laws  of  this  Common- 

6  wealth  regulating  intestate  succession,  from  any  person  who  is  a  resi- 

7  dent  of  the  Commonwealth  at  the  time  of  his  death  and  who  shall  die 

8  on  or  after  the  day  of  the  passage  of  this  act  seized  or  possessed  of  the 

9  property. 

10  (2.)     When  the  transfer  is  by  will  or  by  law  regulating  intestate 

11  succession,  of  property  within  this  Commonwealth  and  the  decedent, 

12  dying  on  or  after  the  day  of  the  passage  of  this  act,  was  a  non-resident 

13  of  the  Commonwealth  at  the  time  of  his  death. 

14  (3.)     When  the  transfer  is  by  a  resident,  dying  on  or  after  the  day 

15  of  the  passage  of  this  act,  or  is  of  property  within  the  Commonwealth 

16  by  a  non-resident,  so  dying,  by  deed,  grant,  sale  or  gift,  made  on  or 

17  after  the  day  of  the  passage  of  this  act,  if  made  in  contemplation  of  the 

18  death  of  the  grantor,  vendor  or  donor,  or  intended  to  take  effect  in  pos- 

19  session  or  enjoyment  at  or  after  such  death. 

20  The  property  which  is  the  subject  of  such  transfers  as  are  named  in 

21  this  paragraph  shall  be  deemed,  for  the  purposes  of  determining  the  total 

22  amount  of  the  decedent's  estate  and  the  taxes  due  thereon  under  this 


190  APPENDIX  I.— A. 

23  act,  to  be  a  portion  of  the  estate  of  such  decedent,  and  shall  be  included 

24  in  the  inventory  to  be  filed  by  his  executor  or  administrator  as  herein 

25  provided.     Such  property  shall  be  separately  described  in  such  inven- 

26  tory  in  a  manner  sufficient  for  identification  and  the  date  and  the  nature 

27  of  the  conveyance  to  the  grantee,  vendee  or  donee  briefly  stated. 

28  (4.)     If  any  person,  on  or  after  the  day  of  the  passage  of  this  act, 

29  shall  transfer  any  property  which  he  owns  or  shall  cause  any  property  to 

30  which  he  is  absolutely  entitled,  to  be  transferred  to,  or  vested  in  himself 

31  and  any  other  person  jointly,  so  that  the  title  therein,  or  in  some  part 

32  thereof,  vests  on  survivorship  in  such  other  person,  a  transfer  shall  be 

33  deemed  to  occur  and  to  be  taxable  under  the  provisions  of  this  act  upon 

34  the  vesting  of  such  title,  and  the  value  of  the  property  so  transferred  or 

35  vested  shall  be  considered  a  portion  of  the  estate  of  the  person  so 

36  transferring  or  causing  such  property  to  be  so  transferred  or  vested  in 

37  determining  the  amount  of  his  estate  under  this  act  and  the  taxes  due 

38  thereon,  and  shall  be  included  and  described  in  the  inventory  as  pro- 

39  vided  above. 

40  (5.)     Whenever  any  person  shall  exercise  by  will  a  power  of  ap- 

41  pointment  derived  from  any  disposition  of  property,  made  either  before 

42  or  after  the  day  of  the  passage  of  this  act,  such  appointment,  when 

43  made,  shall  be  deemed  a  transfer  taxable  under  the  provisions  hereof, 

44  and  the  value  of  the  property  so  transferred  shall  be  considered  a  por- 

45  tion  of  the  estate  of  the  person  exercising  such  power  in  determining 

46  the  amount  of  his  estate  under  this  act  and  the  taxes  due  thereon,  and 

47  shall  be  included  and  described  in  the  inventory  as  provided  above. 

1  SECT.  2.     Every  devise  or  bequest  ostensibly  in  payment  of  a  debt 

2  of  the  testator  shall  be  taxable  upon  the  excess  in  value  of  the  property 

3  devised  or  bequeathed,  otherwise  liable  to  such  tax,  over  and  above  the 

4  true  amount  of  such  debt.     Every  devise  or  bequest  to  an  executor  or 

5  trustee,  purporting  to  be  in  compensation  for  services,  shall  be  taxable 

6  upon  so  much  of  the  value  of  the  property  devised  or  bequeathed,  other- 

7  wise  liable  to  such  tax,  as  is  in  excess  of  a  reasonable  compensation  for 

8  such  services. 


APPENDIX  I.— A.  191 

1  SECT.  3.     When  property  passes  by  any  such  transfer  to  or  for  the 

2  use  of  the  father,  mother,  husband,  wife,  lineal  descendant,  adopted 

3  child,  or  lineal  descendant  of  an  adopted  child  of  the  decedent,  such 

4  property  shall 'be  exempt  from  a  tax  unless  the  clear  market  value  of 

5  the  estate  of  the  decedent  shall  exceed  ten  thousand  dollars.     Five 

6  thousand  dollars  of  the  total  amount  passing  to  the  persons  hereinbefore 

7  named  in  this  section  shall  be  exempt  from  such  tax,  if  the  clear  mar- 

8  ket  value  of  the  decedent's  estate  exceeds  ten  thousand  dollars  but  is 

9  not  more  than  twenty-five  thousand  dollars. 

10  Property  of  a  resident  of  the  Commonwealth  which  is  not  therein  at 

11  the  time  of  his  death  shall  not  be  taxable  under  the  provisions  of  this 

12  act  if  legally  subject  in  another  state  or  country  to  a  tax  of  like  charac- 

13  ter  and  amount  to  that  hereby  imposed,  and  if  such  tax  be  actually  paid 

14  or  guaranteed  or  secured  in  accordance  with  law  in  such  other  state  or 

15  country ;   if  legally  subject  in  another  state  or  country  to  a  tax  of  like 

16  character  but  of  less  amount  than  that  hereby  imposed  and  such  tax 

17  be  actually  paid  or  guaranteed  or  secured  as  aforesaid,  such  property 

18  shall  be  taxable  under  this  act  to  the  extent  of  the  difference  between 

19  the  tax  thus  actually  paid,  guaranteed  or  secured,  and  the  amount  for 

20  which  such  property  would  otherwise  be  liable  hereunder.     Property 

21  of  a  non-resident  decedent  which  is  within  the  Commonwealth  at  the 

22  time  of  his  death,  if  subject  to  a  tax  of  like  character  with  that  imposed 

23  by  this  act,  by  the  law  of  the  state  or  country  of  his  residence  shall  be 

24  subject  only  to  such  portion  of  the  tax  hereby  imposed  as  may  be  in 

25  excess  of  such  tax  imposed  by  the  laws  of  such  state  or  country :  pro- 

26  vided,  a  like  exemption  is  made  by  the  laws  of  such  other  state  or  country 

27  in  favor  of  estates  of  citizens  of  this  Commonwealth,  but  no  such  ex- 

28  emption  shall  be  allowed  until  such  tax  provided  for  by  the  law  of  such 

29  other  state  or  country  shall  be  actually  paid,  guaranteed  or  secured 

30  in  accordance  with  law. 

31  A  receipt  or  certificate  from  the  officer  of  such  other  state  or  country 

32  charged  with  the  duty  of  collection  of  such  tax,  or  the  acceptance  of 

33  such  guaranty  or  security,  shall  be  prima  facie  evidence  in  this  Com- 

34  monwealth  of  the  fact  of  such  payment,  guaranty  or  security. 


192  APPENDIX  I.  — A. 

1  SECT.  4.     Every  tax  imposed  by  this  act  shall  be  payable  at  the 

2  expiration  of  two  years  from  the  approval  of  the  bond  of  the  executor 

3  of  the  will  or  administrator  of  the  estate  of  the  decedent,  but  if  any 

4  legacy  or  distributive  share  shall  be  paid  within  said  two  years  the  tax 

5  upon  so  much  of  the  estate  of  the  decedent  shall  be  payable  at  the  time 

6  such  legacy  or  share  is  paid.     All  such  taxes  and  the  interest  that  may 

7  accrue  thereon  shall  be  and  remain  a  charge  and  lien  upon  the  property 

8  transferred  until  paid :  and  the  person  to  whom  the  property  is  trans- 

9  f erred,  if  he  shall  receive  the  same  before  the  tax  thereon  is  paid,  and 

10  the  executors,  administrators  and  trustees  of  every  estate  so  transferred, 

1 1  shall  be  personally  liable  for  such  tax  and  interest  until  its  payment, 

1 2  and  the  statute  of  limitations  shall  not  be  a  defence  to  an  action  for  the 

13  recovery  thereof. 

14  Whenever  the  probate  court  shall  order  an  executor  or  administrator 

1 5  to  retain  funds  to  satisfy  the  claim  of  a  creditor  whose  right  of  action 

16  does  not  accrue  within  two  years  from  the  date  of  the  approval  of  the 

1 7  bond  of  such  executor  or  administrator,  the  payment  of  the  whole  or  a 

18  proportionate  part  of  the  tax  may  be  suspended  by  an  order  of  the  court 

19  to  await  the  disposition  of  such  claim,  and,  in  such  case,  the  tax  shall 

20  be  payable  when  the  time  of  such  suspension  expires. 

1  SECT.  5.     Interest  shall  be  charged  and  collected  upon  all  taxes 

2  imposed  by  this  act  from  the  time  when  the  same  become  payable,  at 

3  the  rate  of  eight  per  cent,  per  annum,  unless  by  reason  of  claims  made 

4  upon  the  estate,  necessary  litigation  or  other  unavoidable  delay,  such 

5  tax  cannot  be  determined  and  paid  as  herein  provided ;  in  which  case, 

6  interest  shall  be  charged  at  such  rate  after  the  cause  of  such  delay  is 

7  removed. 

8  Interest  shall  be  charged  at  the  rate  of  four  per  cent,  per  annum  upon 

9  taxes  which  become  payable  in  instalments  under  the  provisions  of  sec- 
10  tion  eight  until  they  are  payable. 

1  SECT.  6.     Every  executor  or  administrator  of  an  estate,  any  part  of 

2  which  is  subject  to  such  tax,  shall  pay  the  same  upon  the  clear  mar- 

3  ket  value  of  all  the  property  subject  to  tax,  whether  there  are  or  are  not 


APPENDIX  I.  — A.  193 

4  devises  or  bequests  of  successive  interests  in  the  same  property  and 

5  whether  such  successive  interests,  if  any,  are  defeasible  or  indefeasible, 

6  absolute  or  contingent.     Such  payment  shall  be  made  out  of  said  estate 

7  in  the  same  manner  as  other  debts  may  be  paid.     The  executor  or  admin- 

8  istrator  may  sell  personal  property  for  that  purpose  when  necessary,  and 

9  the  probate  court  may  authorize  him  to  sell  real  estate  for  the  payment 

10  thereof  in  the  same  manner  as  it  may  authorize  the  sale  of  real  estate 

11  for  the  payment  of  debts. 

12  In  case  of  a  transfer  to  any  person  of  an  interest  in  any  property 

13  less  than  the  entire  interest,  which  transfer  is  exempt  in  whole  or  in 

14  part  under  the  provisions  of  the  first  paragraph  of  section  three,  with  a 

15  remainder  or  reversion  to  any  other  person  which  is  taxable,  the  value 

16  of  the  prior  estate  shall  be  deducted  from  the  value  of  such  property 

17  and  the  balance  shall  be  subject  to  tax.     In  such  case,  the  executor  or 

18  administrator  shall  apply  to  the  probate  court  to  determine  the  amount 

19  of  such  tax,  and  the  court,  after  such  notice  to  the  treasurer  and  re- 

20  ceiver  general  as  it  deems  fit,  shall  make  such  determination  and  such 

21  other  orders  as  the  case  may  require.     In  fixing  the  value  of  such  inter- 

22  ests,  if  they  are  annuities  or  estates  for  life  or  for  years,  the  same  shall 

23  be  ascertained,  when  practicable,  by  the  actuaries'  combined  experience 

24  tables  at  four  per  cent,  compound  interest.     When  not  practicable,  the 

25  court  shall  fix  the  same  according  to  its  judgment.     The  determination 

26  of  the  probate  court  as  to  the  value  of  such  interests,  and  of  the  amount 

27  of  the  tax  to  be  paid  upon  such  taxable  interest,  shall  be  final  and  con- 

28  elusive,  except  upon  questions  of  law. 

1  SECT.  7.     Whenever  any  foreign  executor,  administrator  or  trustee 

2  shall  assign  or  transfer  in  this  Commonwealth  any  stock,  bond  or  other 

3  security  liable  to  any  such  tax,  standing  in  the  name  of,  or  in  trust  for 

4  a  decedent,  he  shall  pay  the  tax  to  the  treasurer  on  the  transfer  thereof ; 

5  otherwise  any  person  having  authority  to  make  or  permit  such  transfer 

6  and  making  or  permitting  it  shall  be  liable  to  pay  the  tax  if  he  had 

7  knowledge,  or  reasonable  cause  to  believe,  at  the  time  of  the  transfer, 

8  that  the  property  was  liable  to  the  tax. 


194  APPENDIX  I.— A. 

1  SECT.  8.     The   executor   or  administrator  of   an  estate   consisting 

2  wholly  or  partially  of  real  property  chargeable  with  a  tax  may  elect  at 

3  any  time  before  such  tax  is  payable  to  pay  the  same  in  equal  annual 

4  instalments,  not  exceeding  five  in  all,  the  first  instalment  to  be  payable 

5  when  the  tax  thus  divided  would  have  been  payable  but  for  such  election. 

6  Notice  of  such  election  shall  be  given  in  writing  made  in  duplicate  and 

7  filed  in  the  registry  of  probate  and  in  the  office  of  the  treasurer. 

1  SECT.  9.     Whenever  it  shall  come  to  the  knowledge  of  an  executor, 

2  administrator  or  trustee,  after  the  filing  of  his  inventory,  that  any  prop- 

3  erty  of  the  decedent  not  included  in  such  inventory  is  subject  to  a  tax 

4  under  the  provisions  of  this  act,  he  shall  file  a  supplemental  inventory 

5  thereof  within  one  month  from  the  time  he  obtains  such  knowledge. 

1  SECT.   10.     The  probate  court,  having  jurisdiction  of  the  settlement 

2  of  the  estate  of  the  decedent,  if  a  resident,  and  the  probate  court  of  the 

3  county  in  which  there  may  be  any  property  of  the  decedent,  if  a  non- 

4  resident,  shall  have  jurisdiction  to  hear  and  determine  all  questions 

5  relating  to  any  tax  under  this  act.     The  treasurer  shall  represent  the 

6  interests  of  the  Commonwealth  in  any  such  proceeding  and  shall  be 

7  notified  thereof  by  the  register.       Every  petition  for  ancillary  letters 

8  shall  contain  a  true  and  correct  statement  of  all  the  decedent's  property 

9  in  this  Commonwealth.     If  more  than  one  court  shall  be  entitled  to 

10  jurisdiction  in  any  case,  the   court   first   acquiring   jurisdiction  shall 

11  retain  it  to  the  exclusion  of  every  other. 

1  SECT.   11.     If,  upon  the  decease  of   any  person  leaving  an  estate 

2  liable  to  a  tax  under  this  act,  a  will  disposing  of  such  estate  is  not 

3  offered  for  probate,  or  an  application  for  administration  made,  within 

4  four  months  after  such  decease,  the  treasurer  may  make  application  to 

5  the  proper  court  setting  forth  such  facts  and  praying  that  an  adminis- 

6  trator  may  be  appointed,  and  thereupon  the  court  shall  appoint  an 

7  administrator  of  such  estate. 

1  SECT.  12.     An  inventory  of  every  estate,  any  part  of  which  may  be 

2  subject  to  a  tax  under  this  act,  shall  be  filed  by  the  executor,  adminis- 


APPENDIX  I.— A.  195 

3  trator  or  trustee  within  three  months  from  the  approval  of  his  bond ; 

4  but  the  inventory  of  the  estate  of  a  non-resident  decedent  need  not 

5  include  propert}r  without  the  Commonwealth  unless  an  exemption  from 

6  such  tax  is  claimed  as  to  property  within  the  Commonwealth. 

7  The  court  may  accept  a  sworn  statement  by  the  executor,  adminis- 

8  trator  or  trustee  as  to  the  amount  of  that  portion  of  the  estate  of  a 

9  non-resident  decedent  which  is  without  the  Commonwealth,  in  lieu  of 

10  an  inventory  thereof,  when  it  is  satisfied  that  an  inventory  cannot  be 

11  furnished  or  is  unnecessary. 

12  Every  person  who  becomes  entitled  to  any  property  of  a  non-resident. 

13  decedent  or  of  any  interest  therein  by  any  transfer  described  in  the 

14  third  or  fourth  paragraph  of  section  one,  unless  an  inventory  thereof 

15  shall  already  have  been  filed  by  an  executor,  administrator  or  trustee, 

16  shall  file  an  inventory  of  the  same  within  six  months  after  he  becomes 

17  so  entitled,   and  the  probate  court  shall  have  the  same  authority  to- 

18  appoint  appraisers  thereof  as  in  other  cases.     In  his  application  for 

19  appointment  of  such  appraisers,  such  person  shall  give  a  brief  descrip- 

20  tion  of  such  property  or  interest  sufficient  for  identification,  a  state- 

21  ment  of  the  source  and  nature  of  his  title  and  the  date  when  he  became 

22  entitled  thereto. 

23  In  all  inventories  all  property  shall  be  appraised  at  its  actual  market 

24  value.     Every  inventory  shall  be  made  in  duplicate  and  be  filed  in  the 

25  registry  of  probate  and  in  the  office  of  the  treasurer.     For  failure  to  file 

26  such  inventory  within  the  time  herein  prescribed  or  such  further  time  as 

27  the  court  may  grant,  the  executor,  administrator  or  trustee  and  every 

28  person  charged  with  such  duty  shall  be  liable  to  a  penalty  not  exceed- 

29  ing  ten  per  cent,  of  the  value  of  the  property  of  which  return  should 

30  have  been  so  made,  to  be  recovered  for  the  use  and  in  the  name  of  the 

31  Commonwealth  in  an  action  of  tort,  and  the  treasurer  shall  cause  such 

32  action  to  be  brought  when  in  his  opinion  the  interests  of  the  Common- 

33  wealth  require  it,  and  the  provisions  of  section  fourteen  with  reference 

34  to  actions  of  contract  shall  be  applicable  thereto,  except  that  there  shall 

35  be  a  right  to  trial  by  jury.      The  court  for  good  cause  may  extend 

36  the  time  for  filing  any  inventory  and  may  grant  leave  to  file  supple- 


196  APPENDIX  I.— A. 

37  mental    inventories,    and    whenever    occasion    requires    may   appoint 

38  appraisers  of  estates  and  property. 

39  At  any  time  within  six  months  after  the  filing  of  any  such  inventory, 

40  upon  the  application  of  any  person  interested,  including  the  treasurer, 

41  the  court  may  appoint  one  or  more,  but  not  exceeding  three,  disinter- 

42  ested  and  competent  persons  to  appraise  the  estate  of  a  decedent  and 

43  any  property  which  may  be  subject  to  a  tax  under  this  act.     Such 

44  appraiser  or  appraisers  shall  forthwith  give  such  notice  by  mail  as  the 

45  court  shall  order  to  such  persons  as  the  court  may  direct,  including  the 

46  treasurer,  of  the  time  and  place  when  and  where  such  appraisal  will  be 

47  made,  and  shall  appraise  such  estate  and  property  at  its  actual  market 

48  value,  and  make  report  to  the  court  of  their  appraisal  and  of  such  facts 

49  relating  to  the  property  and  its  value  as  it  may  order.     Such  report 

50  shall  be  made  in  duplicate,  and  shall  be  filed  in  the  registry  of  probate 

51  and  in  the  office  of  the  treasurer,  and  when  accepted  by  the  court  shall 

52  be  final  and  conclusive  as  to  the  actual  market  value  of  such  property, 

53  except  upon  questions  of  law.     The  fees  of  such  appraisers  shall  be 

54  fixed  by  the  court  and  shall  be  paid  by  the  treasurer.     Instead  of 

55  appointing  such  appraiser   or  appraisers  upon  such    application,   the 

56  court  may  revise  and  correct  any  inventory  or  may  itself  appraise  any 

57  such  estate  or  property,  and  such  action  shall  be  final  and  conclusive 

58  as  to  the  actual  market  value  of  such  property,  except  upon  questions 

59  of  law. 

1  SECT.   13.     From  such  report,  or  the  appraisal  by  the  court,  or  the 

2  corrected  inventory,  or,  in  cases  in  which  no  reappraisal  or  correction 

3  has  been  made,  from  the  original  inventory,  and  from  the  evidence  as 

4  to  debts  and  incumbrances  and  such  other  evidence  as  may  be  pro- 

5  duced,  the  register,  when  directed  by  the  court,  shall  compute  the  clear 

6  market  value  of  the  estate  of  the  decedent  and  the  amount  of  tax  to 

7  which  the  property  is  liable,  and  give  immediate  notice  of  the  results  of 

8  such  computation  by  mail  to  the  person  responsible  for  the  payment 

9  thereof  and  to  the  treasurer.     Any  doubtful  or  controverted  questions 

10  arising  in  such  computation  shall  be  referred  to  and  determined  by  the 

11  court.     After  the  expiration  of  thirty  days  from  the  giving  of  such 


APPENDIX  I.— A.  197 

12  notice  by  the  register  the  court  may  enter  a  decree,  determining  such 

13  clear  market  value  and  amount  of  tax,  unless  the  treasurer  or  some 

14  other  person  in  interest,  within  such  thirty  days,  shall  file  in  the  regis- 

15  try  a  written  notice  of  his  desire  to  be  heard  thereon,  in  which  case,  a 

16  hearing  shall  be  had  before  the  court,  of  which  such  notice  as  the  court 

17  may  order  shall  be  given  by  mail  to  such  persons  as  the  court  shall 

18  direct  and  to  the  treasurer,  and  thereupon,  the  court  shall  determine 

19  the  clear  market  value  of  the  estate  of  the  decedent  and  the  amount  of 

20  tax  to  which  such  property  is  liable,  and  such  determination  shall  be 

21  final  and  conclusive  except  upon  questions  of  law.     When  it  shall  be 

22  proved  to  the  satisfaction  of  the  court,  within  one  year  from  the  deter- 

23  mination  of  the  amount  of  the  tax,  that  deductions  for  debts  have  been 

24  erroneously  made,  the  court  may  enter  an  order  correcting  such  previous 

25  determination  and  fixing  the  amount  of  the  tax  to  be  paid  upon  the 

26  amount  erroneously  deducted. 

27  The  clear  market  value  of  an  estate  is  its  actual  market  value  after 

28  deducting  debts  and  incumbrances.     In  fixing  such  clear  market  value 

29  allowances  shall  not  be  made  for  debts  incurred  by  the  decedent  or  in- 

30  cumbrances  made  by  him  unless  such  debts  or  incumbrances  were  in* 

31  curred  or  created  in  good  faith  for  an  adequate  consideration,  nor  for 

32  any  debt  in  respect  whereof  there  is  a  right  to  reimbursement  from  any 

33  other  estate  or  person  unless  such  reimbursement  cannot  be  obtained. 

1  SECT.  14.     All  taxes  imposed  by  this  act  shall  be  paid  to  the  treas- 

2  urer  for  the  use  of  the  Commonwealth.     The  person  paying  the  tax 

3  shall,  upon  payment,  furnish  the  treasurer  a  statement  which  shall  show 

4  upon  what  estate,  interest  or  property  the  tax  is  paid,  and  by  whom  paid. 

5  The  treasurer  shall  give  to  the  person  so  paying  duplicate  receipts  signed 

6  by  him  for  such  payment,  stating  upon  what  property,  estate  or  interest 

7  the  tax  was  paid  and  its  amount,  and  whether  in  full  of  such  tax,  one 

8  of  which  shall  be  filed  in  the  registry ;  and  no  executor,  administrator 

9  or  trustee  shall  be  entitled  to  allowance  of  his  final  account  in  settle- 

10  ment  of  an  estate  charged  by  this  act  with  the  payment  of  a  tax  until 

11  he  has  filed  such  receipt,  showing  the  payment  of  all  taxes  due  from 

12  such  estate. 


198  APPENDIX  I.— A. 

13  The  court  upon  the  petition  of  the  treasurer,  after  such  notice  by 

14  mail  as  it  deems  fit  to  him  and  to  the  persons  in  interest,  may  order  the 

15  executor  or  administrator  of  an  estate  from  which  any  such  tax  is  due 

16  and  payable  to  make  sale  of  the  estate,  interest  or  property  chargeable 

17  with  the  tax  or  any  portion  thereof  to  satisfy  the  same. 

18  Such  sale  shall  be  by  public  auction  and  such  notice  thereof  shall  be 

19  given  as  is  provided  by  law  in  sales  of  real  estate  by  executors  and 

20  administrators   for   the   payment   of  debts :    provided,    that  with  the 

21  assent  of  the  owner  of  such  interest,  if  competent  to  act,  and  if  not 

22  competent,  with  the  assent  of  his  guardian  or  trustee,  such  court  may 

23  authorize  the  executor  or  administrator  to  make  sale  of  such  interest 

24  at  private  sale. 

25  The  treasurer  may  cause,  at  any  time,  an  action  of  contract  to  be 

26  brought  in  the  name  of  the  Commonwealth  for  the  collection  of  such 

27  tax,  which  shall  be  heard  and  determined  in  like  manner  as  other  civil 

28  causes  by  the  court  sitting  without  a  jury.     The  taxable  costs  recovered 

29  in  such  action  shall  be  the  property  of  the  Commonwealth  and  shall  be 

30  paid  to  the  treasurer  when  collected.     The  necessary  disbursements  in 

31  the  cause  shall  be  paid  by  the  treasurer  upon  the  certificate  of  the  dis- 

32  trict  attorney.     The  district  attorney  of  the  district  in  which  the  court 

33  having  jurisdiction  of  the  estate  is  located  shall  represent  the  interests 

34  of  the  Commonwealth  in  all  proceedings  in  the  probate  court  under 

35  this  act  and  in  actions  brought  in  other  courts  for  the  recovery  of  any 

36  tax  or  penalty,  when  requested  in  writing  by  the  treasurer  or  by  the 

37  probate  court. 

38  The  treasurer,  with  the  approval  of  the  court  which  determined  the 

39  amount  of  the  tax,  may  compromise  and  settle  the  amount  of  such  tax 

40  whenever  controversies  arise  as  to  the  relationship  of  the  beneficiaries 

41  to  the  former  owner  of  the  property. 

42  If  upon  application  to  the  probate  court,  by  the  executor,  adminis- 

43  trator  or  other  person  who  has  paid  any  such  tax,  made  within  one 

44  year  of  the  time  the  tax  is  required  to  be  paid,  such  court  shall  find, 

45  after  notice  to  the  treasurer,  that  the  whole  or  any  part  of  such  tax 

46  should  not  have  been  paid,  the  treasurer  shall  repay  so  much  thereof 


APPENDIX  I.— A.  199 

47  as  should  not  have  been  paid  with  interest  at  the  rate  of  four  per  cent. 

48  per  annum  from  the  time  it  was  paid,  but  no  such  payment  shall  be 

49  made  unless  demand  for  the  same  be  made  within  one  year  from  such 

50  determination. 

1  SECT.   15.     Any  person  upon  the  payment  of  fifty  cents,  shall  be 

2  entitled  to  a  receipt  from  the  treasurer  under  his  official  seal,  which 

3  shall  state  upon  what  real  estate,  if  any,  of  which  any  decedent  may 

4  have  died  seized,  such  tax  has  been  paid,  by  whom  paid  and  whether 

5  in  full  of  such  tax.     Such  receipt  may  be  recorded  in  the  registry  of 

6  deeds  for  the  county  or  district  in  which  such  real  estate  lies,  in  a  book 

7  to  be  kept  by  the  register  of  deeds  for  that  purpose  which  shall   be 

8  labelled    "inheritance   tax."     The   fee   for   such   recording   shall   be 

9  twenty-five  cents. 

1  SECT.   16.     All  notices  required  by  this  act  to  be  given  by  mail  shall 

2  be  sent  to  the  respective  residences  of  the  persons  entitled  to  notice,  as 

3  shown  on  the  files  and  records  in  each  case  in  the  registry  of  probate, 

4  unless  more  specific  addresses  are  furnished  therein. 

1  SECT.  17.     A  copy  of  every  order  suspending  the  payment  of  a  tax, 

2  of  every  order  or  decree  of  the  court  revising  any  inventory  or  apprais- 

3  ing  any  property  and  of  every  determination  by  the  court  under  the 

4  provisions  of  section  thirteen  shall  be  sent  by  the  register  by  mail  to 

5  the  treasurer  within  ten  days  of  the  filing  or  entry  thereof. 

1  SECT.   18.     Chapter  four  hundred  and  twenty-five  of  the  acts  of  the 

2  year  eighteen  hundred  and  ninety-one,  chapter  four  hundred  and  thirty- 

3  two  of  the  acts  of  the  year  eighteen  hundred  and  ninety-three,  chapter 

4  three  hundred  and  seven  of  the  acts  of  the  year  eighteen  hundred  and 

5  ninety-five,  chapter  one  hundred  and  eight  of  the  acts  of  the  year  eight- 

6  een  hundred  and  ninety-six  and  all  acts  and  parts  of  acts  inconsistent 

7  herewith  are  repealed,  except  as  to  estates  and  property  of   persons 

8  deceased  prior  to  the  day  of  the  passage  of  this  act  which  are  or  may 

9  become  chargeable  with  a  tax  under  their  provisions,  and  except  also 

10  as  to  persons  who  are  or  may  thus  become  liable  to  pay  a  tax  or  pen- 

11  alty  in  respect  of  such  estates  or  property. 


[Bill  proposed  by  the  Majority  of  the  Commission.] 


APPENDIX  I.      [B] 


0f 


AN  ACT  IMPOSING  A  TAX  ON  OCCUPANTS  OP  HABITATIONS. 

Be  it  enacted,  etc.,  as  follows  : 

1  SECTION  1.     On  and  after  the  first  day  of  May,  in  the  year  eighteen 

2  hundred  and  ninety-eight,  there  shall  annually  be  assessed  and  collected 

3  in  each  city  and  town  within  the  Commonwealth,  upon  every  occupant 

4  of  a  habitation  situated  within  such  city  or  town,  a  tax  of  ten  per  cent. 

5  of  the  annual  rental  value  of  such  habitation  in  excess  of  four  hundred 

6  dollars.     If  any  person  is  the  occupant  of  more  than  one  such  habita- 

7  tion,  there  shall  be  deducted  from  the  annual  rental  value  of  each  such 

8  habitation  a  proportional  part  of  four  hundred  dollars,  according  to 

9  the  number  of  such  habitations,  and  the  tax  shall   be  assessed  upon 

10  the  balance  of  the  annual  rental  value  of  each. 

11  A  habitation,  for   the  purpose  of   this  act,  shall  mean  a  building 

12  or  that  part  of  a  building  used  as  a  place  of  abode  by  one  or  more 

13  persons  forming  a  single  household,  with  so  much  of   the   land  and 

14  outbuildings  about   or  connected   therewith  as   is  used   in  connection 

15  with  the  house  for  the  purposes  of  residence,  but  excluding  so  much 

16  of   the  building,  land,  and   outbuildings   as   is   used   exclusively  for 

17  purposes  of   trade,  business,  or  a   profession,  or   for  agriculture,  or 

18  other  gainful  occupation.     If  different  parts  of  any  building  are  used 

19  as  places  of   abode   for  separate  households,  the  part  used   by  each 

20  household  shall  be  deemed  a  separate  habitation,  and  in  any  building 


202  APPENDIX   I.  —  B. 

21  used  as  a  hotel,  inn,  apartment  house,  or  lodging  house,  each  room 

22  or  suite  of  rooms  used   as  a  place  of   abode   for  a   guest  or  lodger 

23  having  no  household,  or  for  several  guests  or  lodgers  together  form- 

24  ing  a  single  household,  shall  be  deemed  a  separate  habitation.    Each 

25  habitation  in  a  building  shall  include  all   parts  of   the   building   and 

26  all   land  and  all   outbuildings  to  the  exclusive  use  of   which  in  con- 

27  nection  with  such  habitation  the  occupant  is  entitled,  and  a  propor- 

28  tionate  share  of  all  parts  of  the  building,  all  land,  and  all  outbuildings 

29  to  the  use  of  which  in  connection  therewith  such  occupant  is  entitled 

30  in   common   with   others,  such   proportion   being   determined   by   the 

31  share  of  use  to  which  each  is  entitled. 

32  Every    person    shall    be    deemed    the    occupant    of    a    habitation 

33  within  the  meaning  of   this  act  who,  as  the  head  of   the  household, 

34  occupies   by  himself   or  others  as  a  place  of   abode  for  himself,  his 

35  family,  or  dependents,  or   keeps   for  use  as  such  a  place  of   abode, 

36  such  habitation,  as  owner  or  tenant,  for  a  period  of  three  months  or 

37  more  in  the  year  preceding  the  first  day  of  May ;   but  if  during  the 

38  year  such   person   permanently  and   in  good  faith   gives  up  the  use 

39  of   one  habitation  which  he  has  so  occupied,  and  occupies  for  three 

40  months  or  more   prior  to   the   first   day  of   May,  another   habitation 

41  situated  in  the  same  or  in  a  different  city  or  town  in  the  Common- 

42  wealth,  he  shall  be  deemed  the  occupant  of   that  one  of   said  habi- 

43  tations  which  he  has  last  so  occupied. 

44  If  two  or  more  persons  occupy  a  habitation  in  common  and  no  one 

45  of  them  is  the  head  of  the  household,  then  such  tax  shall  be  assessed 

46  to  each  upon  such   part  of   his  pro  rata  share  of   the  annual   rental 

47  value  of  such  habitation  as  exceeds  four  hundred  dollars. 

1  SECT.  2.     The   assessors   of   every   city   and   town   annually  when 

2  giving   the   notice   provided    for   by  section    thirty-eight   of   chapter 

3  eleven  of   the   Public   Statutes,  shall   in   the  manner  there  specified, 

4  notify  every  occupant  of   a  habitation  situated  in  such  city  or  town 

5  of   which   the  annual   rental  value  exceeds   four   hundred  dollars,  to 

6  bring  in  to  the  assessors  within   the   time   therein  specified   a  return 


APPENDIX  L  — B.  203 

7  showing  all   the  habitations  situated  in  the  Commonwealth  of   which 

8  such  person  is  an  occupant   for    the  year  preceding   the  first  day  of 

9  May,   and    the    annual    rental    value    of    each.       The    assessors   shall 

10  thereafter  determine  the   fair  annual  rental  value  of   each  habitation 

11  in    the    city  or  town,  and  assess  to   the   occupant   of    each   the    tax 

12  upon   the  excess   of   such   value  above    four   hundred   dollars.     Any 

13  person  aggrieved  by  the  tax  so  assessed  against  him,  may  apply  for 

14  an  abatement  thereof  in  the  same  manner,  and  with  the  same  rights 

15  of   appeal    in  all  respects,  provided  in  chapter  eleven  of   the   Public 

16  Statutes,  and  the  acts  amendatory  thereof,  as  to  persons  who  season- 

17  ably  bring  in  the  true  lists  required  by  said  statutes,  but  any  person 

18  who  without  a  reasonable  excuse   has    failed   to   bring  in  the  return 

19  required   by  this  section,  unless   he  shows   in  such   proceedings  that 

20  he  was  not  liable  for  any  part  of  the  tax  so  assessed  to  him,  shall 

21  be  entitled   to  an  abatement   of   so  much   only  as   exceeds  by  more 

22  than    ten   per   cent,  the    tax   which   it    appears   in  said    proceedings 

23  should   have   been  assessed   to   him  upon  the  annual  rental  value  as 

24  therein  determined. 

1  SECT.  3.     The  owner   of   any  building   all   or   any  part   of    which 

2  contains  a   habitation  or   habitations  other  than    that  of   which  such 

3  owner   was    during    the    year   preceding    the   first   day    of   May   the 

4  occupant,  shall   during    the    month    of    May    in    person   or    by   duly 

5  authorized  agent,  satisfy  the  assessors  of  the  city  or  town  in  which 

6  such  building  is  situated,  that  no  person  is  liable  to  any  tax  as  the 

7  occupant  of  any  such  habitations  for  said  year,  or  make  a  return  to 

8  the  assessors  specifying  every  person  who  during  said   year  or  such 

9  part  thereof  as  the  owner  has  owned  the  premises,  has  occupied  any 

10  habitation  in  said   building  as  a   place  of   abode   for   himself   or  his 

11  family  or   dependents   during   three   months   or   more,  the   period  of 

12  such  occupation  by  each,  the  rental  charged  for  such  occupation,  and 

13  the  services  and   accommodations  other  than  the  right  of   occupancy 

14  furnished  in  consideration  of  such  rental.     If   all  that  part  used  for 

15  such   habitation  or  habitations  of   any  such  building   has  during  all 


204  APPENDIX   I.  —  B. 

16  of  said  year  or  during  so  much  thereof  as  the  owner  has  owned  the 

17  same,  been  leased  to  or  in  the  possession  of  any  other  person,  such 

18  other  person  shall  so  satisfy  the  assessors  or  make  such  return.     If 

19  the  person  bound  so  to  satisfy  the  assessors,  or  to  make  such  return, 

20  neglects  to  do  so  within  the  month  of   May,  or  within  such   further 

21  time  as  in  case  of   reasonable  excuse   for  such   failure  the  assessors 

22  may  fix,  the  assessors  may,  if   they  believe  that  such   building  con- 

23  tains  any  habitation  of   which  the  annual  rental  value  exceeds    four 

24  hundred  dollars,  determine   the   fair  annual  rental  value  of  so  much 

25  of   the   entire   building   and    land   and    outbuildings  connected  there- 

26  with,  as  appears   to   them  to  be  intended  for  use  as  a  habitation  or 

27  habitations,  and    assess   to   the  person  bound  so  to  satisfy  them,  or 

28  to  make  such  return,  a  tax  of  ten  per  cent,  upon  such  annual  rental 

29  value.      If   any  person   to   whom    a    tax  is  so  assessed    shall   within 

30  one    month    after    the    date    of    the    tax    bill    therefor    satisfy    the 

31  assessors  as  aforesaid,  he  shall  thereupon  be  relieved  from  the  pay- 

32  rnent   of   such   tax;    or   if   he    shall   within  the  same  time  make  the 

33  required   return,  there   shall    be  assessed   to  him  in  lieu  of  such  tax 

34  a   tax  of   ten   per  cent,  upon  the  fair  annual  rental  value  in  excess 

35  of   four   hundred   dollars   of   each  of   said    habitations    for   which   it 

36  appears    that    a    tax    was    assessable    to    some    person  as    occupant. 

37  Any  person   to   whom   a  tax  is  assessed   under  the  foregoing  provi- 

38  sions   of    this    section,    upon    payment    by    him    of     such    tax,    may 

39  recover   in   an   action   of   contract   from   any  person  who  was   liable 

40  to   be   taxed   as    occupant   of   any   habitation   in  such   building,  ten 

41  per   cent,  of   the   annual   rental   value  of   such   habitation   in  excess 

42  of   four   hundred   dollars,    or   if   more   than   one   person   is  liable  as 

43  such   occupant,    a    proportional    part     from    each.       Any   person   to 

44  whom  a  tax  is  assessed  under  this  section  may,  if  aggrieved,  apply 

45  for   an   abatement   as  provided    in  section  two,  but  any  such  person 

46  who   has   not   filed    a   return   prior   to   the  date  of    the    tax   bill   or 

47  within   one  month  thereafter,  shall  be  entitled  to  an  abatement  only 

48  of   so   much   of   the   amount   assessed   to   him   as   exceeds   by  more 


APPENDIX  L  —  B.  205 

49  than    ten    per    cent,    the    amount    for   which    he    was    assessable  as 

50  herein     provided,    as    determined    in    such    proceedings ;     unless    he 

51  shall   (1)   file  such    a    return    and    show  a  reasonable  excuse  for  not 

52  having  done  so  within  the  month  of  May,  or  any  further  time  fixed 

53  by  the  assessors,  or  (2)   show  that   no  other  person  was  liable  to  a 

54  tax   as   occupant   of   any   habitation   in  such   building,  or   (3)   show 

55  that   he  himself   was  not   liable   to   assessment   under   the  provisions 

56  of   this    section;    in   any  one   of   the  last  three  cases,  he  shall  have 

57  an    abatement    of    the    entire    tax    so    assessed    to    him,    except   the 

58  amount    assessable    to    him    as    occupant    of    a   habitation    in   such 

59  building.       The    assessors    may    require    a   supplementary   return   or 

60  returns    from    any   person   bound    so   to   satisfy  them,  or  to  make  a 

61  return,  giving    fuller    and    further  information,   and  may  require  any 

62  such  person  to  answer  upon  oath  any  question  relevant   to  the  sub- 

63  ject    matter    of    such    return ;     and    any   failure    without  reasonable 

64  excuse    to    furnish    any   such   further   return,   or   answer   any   such 

65  question,  shall  have  the  same  effect  as  a  neglect  without  reasonable 

66  excuse   to   furnish   the  original  return.     The  assessors  may,  if   they 

67  think   fit,  assess    the   occupant    of    any  habitation    in    any   building 

68  referred   to   in  this  section,  as  provided  in  section  two,  and  in  that 

69  case   shall    deduct   the    annual    rental   value    of    such    habitation    as 

70  fixed   by  them,  in   determining   the  annual  rental  value  on  which  to 

71  assess   the   tax   to  the  person  failing  to  satisfy  them,  or  to  make  a 

72  return,  as  above  provided. 

73  The    assessors   of   every  city  and   town   annually  when  giving  the 

74  notice   provided    for  in  section  two  shall  in  the  manner  there  speci- 

75  fied    notify  all   persons   bound  to   satisfy  them  or  make  a  return  as 

76  provided  in  this  section,  so  to  do. 

1  SECT.  4.     Any  person    who   in    any  proceedings  for  an  abatement 

2  of   a   tax   assessed   under   this  act,  shows   that   he  was  not   in   fact 

3  liable    to    any  part    of    such   tax,    shall   have   an   abatement   of   the 

4  entire   amount   assessed   to  him.     Any  application  for  an  abatement 


206  APPENDIX   I.  —  B. 

5  under   this    act,    may   be   joined    with   an    application   under  chapter 

6  eleven   of    the   Public    Statutes,    and    the    acts    amendatory    thereof, 

7  for  the  abatement  of  any  other  tax. 

1  SECT.  5.     No   person   shall    be    relieved   from  any  tax  under   this 

2  act    by    reason    of    the    destruction    of    any    habitation    or    building 

3  prior  to   the  first   day  of  May,  if   such  tax  is  otherwise  assessed  in 

4  accordance  with  the  provisions  of  this  act. 

1  SECT.  6.     If   any   person   who   on   the   first   day   of   May  in    any 

2  year   is    liable   to   be    assessed   for   a   tax    under   this  act,  shall   die 

3  before    such   assessment   is  made,  or  the  tax  paid,  the  tax  shall   be 

4  assessed   to  and  paid    by  his  personal  representatives,  and  they  shall 

5  make  the  returns  herein  provided  for. 

1  SECT.   7.     No   person   not   a   resident   of    this    Commonwealth   on 

2  the   first   day   of   May   in   any-  year   shall   in  such  year   be  assessed 

3  for   any  tax   under   this    act,  except   as   the   personal  representative 

4  of  a  deceased  resident. 

1  SECT.  8.     Blanks    for   the   returns    specified   in  sections    two   and 

2  three    shall    be     prepared    and    furnished    in    the    same    manner   as 

3  blanks   are   now    prepared  and    furnished   for  true  lists  of   property. 

4  The   books   furnished  to  assessors  by  the  secretary  of  the  Common- 

5  wealth    under    section    fifty-two    of    -chapter    eleven    of    the    Public 

6  Statutes    and   the  acts  amendatory  thereof,  shall  contain  three  addi- 

7  tional   columns   headed  respectively  ' '  Description  by  name  or  other- 

8  wise  of  each  habitation  of  which  each  person  is  occupant,  on  which 

9  a  tax  is  assessed,"  "Annual  rental  value  of  each  habitation  taxed," 

10  and  "  Tax  on  each   habitation";    the  table  of   aggregates  shall  con- 

11  tain    three   additional   columns   headed   respectively    "Total   number 

12  of   habitations   taxed,"    ''Total   annual   rental   value   of    habitations 

13  taxed,"    and    "Total   tax   on   occupants   of    habitations";     and    the 

14  assessors  shall  make  the  appropriate  entries  in  each  column. 


APPENDIX   I.  — B.  207 

1  SECT.  9.     All   taxes    assessed   under  this  act  in  any  city  or  town 

2  shall  'be    included    in    the    collector's    warrant,    and    he   shall    have 

3  authority   to    collect   the    same    in    the    same   manner   and   with   the 

4  same   powers   as   now  provided    for   the  collection  of   taxes  on   per- 

5  sonal  property. 

1  SECT.   10.      All  general  laws  relating   to   the  assessment  and  col- 

2  lection    of    taxes    not    inconsistent    with   the   provisions   of    this   act 

3  shall  so  far  as  applicable  apply  to  taxes  imposed  by  this  act. 


[Bill  proposed  by  the  Minority  of  the  Commission.] 


APPENDIX   I.     [C] 


ai 


[In  the  Year  One  Thousand  Eight  Hundred  and  Ninety -eight.] 


AN    ACT    TO    PROVIDE    FOR   THE    STATE    ASSESSMENT     OP 
PERSONAL  PROPERTY. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  in  General  Court  as- 
sembled^ and  by  the  authority  of  the  same,  as  follows: 

1  SECTION  1.     The   taxation  of   personal   estate   now   subject  to  local 

2  assessment  by  the  assessors,  except  the  stock  of  national  banks  located 

3  in  the  Commonwealth,  which  shall  be  taxed  and  the  tax  distributed  as 

4  heretofore,    shall  hereafter  be  by  uniform  state  taxes  laid  under  the 

5  supervision  of  the  tax  commissioner. 

6  He  shall  annually,  in  the  month  of  February,  appoint  as  his  assist- 

7  ants,  subject  to  the  approval   of   the   governor   and   council,  twenty 

8  supervisors  of  taxes,  one  for  each  district  denned  by  him  as  a  tax 

9  district  and  designated  by  number  to  be  composed  of  two  adjoining 

10  senatorial  districts,  and  one  state  assessor  for  each  city  and  town  in  the 

11  Commonwealth,  whose  terms  of  office  shall  begin  on  the  first  day  of 

12  April,  and  who  shall  hold  office  until  their  successors  are  appointed  and 

13  qualified,  but  who  may  be  removed  by  the  tax  commissioner  at  any 

14  time  on  filing  a  statement  of  his  reasons  there  for  with  the  secretary  of 

15  the  Commonwealth.     Vacancies  shall  be  filled  in  the  manner  of  the 

16  original  appointment.     The  supervisors  may  or  may  not  be  residents 

17  of  their  respective  districts,  and  the  state  assessors  of  their  respective 

18  cities  or  towns,  but  all  shall  be  residents  of  the  Commonwealth. 


210  APPENDIX   I.—  C. 

1  SECT.  2.     The  salary  of  the  tax  commissioner  shall  be  four  thousand 

2  dollars  per  annum,  besides  his  necessary  expenses.     Each  supervisor 

3  shall  receive  from  the  state  treasury  a  salary  of  two  thousand  five  hun- 

4  dred  dollars  per  annum  and  his  necessary  expenses.     Each  state  as- 

5  sessor  shall  be,  ex  ojfficio,  a  member  of  the  board  of  assessors  for  the 

6  city  or  town  for  which  he  shall  be  appointed,  and  chairman  of  the 

7  board,  and  shall  be  paid  for  his  services  from  the  treasury  of  the  Com. 

8  monwealth  a  compensation  exceeding  by  twenty  per  cent,   the  com- 

9  pensation  allowed  by  the  city  or  town  to  other  members  of  the  board 

10  respectively,  but  not  less  than  three  dollars  and  fifty  cents  per  day  for 

11  actual  service. 

12  In  case  of  the  temporary  absence  or  disability  of  a  state  assessor,  the 

13  supervisor  of  his  district,  or  some  other  member  of  the  board  of  assess- 

14  ors,  of  which  the  state  assessor  is  a  member,  appointed  thereto  in  writ- 

15  ing  by  the  tax  commissioner,  or,  subject  to  his  approval,   by  such 

16  supervisor,  may,  on  taking  the  oath  of  a   state  assessor,  perform  the 

17  duties  and  have  the  powers  of  such  state  assessor  until  he  returns  to 

18  duty  or  his  successor  shall  be  appointed  and  qualified. 

19  Papers  necessary  to  be  signed  by  such  state  assessor  during  such 

20  period  may  be  signed  by  his  substitute  as  acting  state  assessor.     Such 

21  acting  state  assessor  shall,  if  not  a  supervisor,  while  so  acting,  receive 

22  his  pay  from  the  Commonwealth,  instead  of  the  city  or  town  wherein 

23  he  acts,  at  the  rate  to  which  the  state  assessor  thereof  is  paid  for  like 

24  service. 

25  The  minimum  number  of  assessors  which  each  city  and  town  is  re- 

26  quired  by  law  to  choose  is  reduced  by  one. 

27  Every  state  assessor  shall,  before  entering  upon  his  duties,  subscribe 

28  to  and  take  the  assessor's  oath,  to  the  last  clause  but  one  of  which 

29  shall  be  added  the  words,  "that  I  will  diligently  endeavor  to  discover 

30  and  list  for  taxation  all  personal  property  lawfully  subject  to  assess- 

31  ment  in  the  city  (or  town)  of ." 

32  Every  supervisor  shall,  before  entering  upon  his  duties,  subscribe  to 

33  and  take  the  following  oath  :  — 

34  "  I,  ,  do  hereby  solemnly  swear  that  I  will  faithfully  perform  the 

35  duties  of  supervisor  of  Tax  District  No.      ,  and  that  I  will  diligently  endeavor 


APPENDIX  L  — C,  211 

36  to  discover  and  cause  to  be  listed  for  taxation  in  the  manner  required  by  law 

37  all  personal  property  lawfully  subject  to  assessment  in  that  district." 

38  The  foregoing  oaths  may  be  taken  before  a  justice  of  the  peace  or 

39  notary  public,  and  shall  be  filed  with  the  tax  commissioner. 

1  SECT.  3.     All  personal  property,  including  incomes,  now  subject  ttf 

2  local  assessment  in  any  city  or  town,  shall  be  annually  assessed  as  of 

3  the  first  day  of  May  by  the  state  assessor  a  tax  to  the  parties  liable  to 

4  pay  taxes  thereon  under  present  laws,  which  assessment  shall  be  made 

5  in  the  same  manner,  except  as  otherwise  provided,  as  the  assessors  of 

6  such  city  or  town  are  now  required  to  assess  the  same  ;  but  the  rate  at' 

7  which  the  tax  shall  be  laid   shall    be   uniform  through  the  Common- 

8  wealth,  and  it  shall  be  the  average  rate  at  which  taxes  shall  have  been 

9  laid  on  real  estate  in  the  Commonwealth  in  the  preceding  year,  to  be 

10  determined  by  the  tax  commissioner  by  an  apportionment  of  all  the  taxes 

11  laid  during  the   preceding   year,   as  reported  by  the  assessors  under 

12  section  eighty-six  of  chapter  eleven  of  the  Public  Statutes  upon  the 

13  aggregate  valuation  of  real  estate  in  all  the  cities  and  towns  in  the  preced- 

14  ing  year,  determined  in  the  same  manner  as  he  determines  the  aggregate 

15  valuation  under  section  forty  of  chapter  eleven  of  the  Public  Statutes; 

16  and  property  so  taxed  shall  not  be  subject  to  other  taxation  for  the 

17  current  year  for  state,  city  or  town  or  county  purposes. 

18  In  such  assessment  by  the  state  assessor  it  shall  be  the  duty  of  the 

19  other  assessors  of  the  same  city  or  town  to  render  to  him  such  assist- 

20  ance  as  he  may  require,  and  they  shall  impart  to  him,  as  required,  all 

21  their  information  as  to  the  personal  estate  of  parties  subject  to  assess- 

22  ment  by  him. 

1  SECT.  4.     The  notices  to  the  inhabitants  to  bring  in  to  the  assessors 

2  true  lists  of  all  their  polls  and  personal  estate  subject  to  taxation  shall 

3  be  signed  by  the  state  assessor,  as  well  as  by  the  other  assessors ;  and 

4  either  of  the  assessors,  as  well  as  the  state  assessor,  may  take  such 

5  lists  and  administer  the  oath  to  the  truth  of  the  same  to  the  persons 

6  making  the  same,  and  examine  such  persons   under  oath  as  to  the 

7  nature  and  amount  of  their  properties  of  whatever  nature,  to  such  ex- 


212  APPENDIX   I.— C. 

8  tent  as  may  be  necessary  to  discover  the  amount  thereof  subject  to  the 

9  tax  herein  provided  for.     If  taken  by  any  other  assessor,  such  list  shall 

10  disclose  the  post  office  address  of  the  person  making  and  bringing  in  the 

11  same  and  be  forthwith  delivered  to  the  state  assessor,  and  all  informa- 

12  tion  obtained  as  to  the  property  of  the  person  making  the  same  imparted 

13  to  him.     If  such  list  and  information  shall  not  be  satisfactory  to  him,  he 

14  shall,  within  thirty  days  from  the  time  of  receiving  it,  notify  the  person 

15  making  it  to  appear  before  him  at  a  time  and  place  specified,  to  submit 

16  to  further  examination  as  to  his  taxable  personal  estate;   and  if  such 

17  person  shall  not  appear  as  notified,  or  within  two  days  after  the  speci- 

18  fied  day  submit  himself  to  the  state  assessor  and  give  reasonable  oppor- 

19  tunity  to  the  state  assessor  to  examine  him,  as  he  may  require,  either 
10  then  or  at  a  time  and  place  to  be  appointed  by  the  state  assessor,  or 

21  shall  refuse  on  appearance  to  answer  on  oath  all  inquiries  necessary  to 

22  discover  his  taxable  personal  estate,  his  list  shall  not  be  deemed  con- 

23  elusive  or  taken  to  have  been  lawfully  made  or  accepted.     Notice  to  the 

24  person  required  to  appear  given  by  registered  letter,  postpaid,  directed 

25  to  his  address  as  last  ascertained  by  the  assessors,  shall  be  sufficient, 

26  but  shall  not  preclude  other  notice. 

1  SECT.   5.     When  any  person  liable  to  taxation  on  personal  estate 

2  shall  fail  to  bring  in  to  the  assessors,  as  required,  a  true  list,  duly  sworn 

3  to,  of  the  same,  or,  having  brought  in  such  list,  shall  neglect  or  refuse 

4  to  answer  on  oath  all  inquiries  of  the  assessors  necessary  to  enable 

5  them  to  ascertain  the  nature  and  amount  of  such  taxable  estate,  or,  be- 

6  ing  cited,  shall  afterwards  refuse  or  neglect,  to  appear  before  the  state 

7  assessor  and  answer  on  oath  such  inquiries,  the  state  assessor  shall 

8  otherwise  ascertain  as  nearly  as  he  may  the  particulars  of  the  personal 

9  estate  of  such  person  subject  to  taxation,  and  shall,  according  to  his 

10  best  information  and  belief,  make  an  estimate  thereof  at  its  just  value 

11  and  enter  the  same  in  his  valuation,  which  estimate  shall  be  conclusive, 

12  unless  such  person  can  show  reasonable  excuse  for  his  omission,  and 

13  except  as  such  amount  may  be  reduced  by  abatement. 

14  The  state  assessor,  after  having  entered  the  personal  estate  of  such 
.15  persons  so  ascertained,  in  the  valuation,  shall  enter  in  said  valuation 


APPENDIX   I.  —  C.  213 

16  of  the  personal  estate  of  such  person  another  equal  amount,  in  another 

17  column  of  the  valuation  list,  upon  which  such  person  shall  be  assessed 

18  a  further  tax  by  way  of  doomage,  as  upon  so  much  personal  estate. 

1  SECT.  6.     No  person   shall  have  an  abatement  of  his  personal  prop- 

2  erty  tax  unless  he  shall  have  delivered  to  the  assessors  a  sworn  list  of 

3  his  personal  estate  subject  to  taxation,  and  answered  on  oath  all  neces- 

4  sary  inquiries  to  enable  the  state  assessor  to  ascertain  the  details  of  the 

5  same,  and  shall  have  submitted  himself  to  examination  by  said  assessor 

6  if  required,  and  thereat  answered  inquiries  as  required  under  section 

7  six.     But  any  person  allowed  an  abatement  of  taxes  assessed  on  per- 

8  sonal  estate   shall  be  entitled  to  a  like   proportionate   abatement   of 

9  doomage,  and  an  entire  abatement  of  doomage  may  be  allowed  to  any 

10  person  under  the  provisions  of  law  relating  to  the  abatement  of  personal 

11  property  taxes,  and  on  compliance  therewith,  on  proof  that  there  has 

12  been  on  the  part  of  the  applicant  for  abatement  no  default,  failure  or 

13  neglect,  or  refusal  to  answer  inquiries  of  the  assessors,  by  reason  of 

14  which  such  applicant  was  liable  to  be  assessed  for  doomage,  or  that  in 

15  case  of  such  default  or  failure,  neglect  or  refusal,  there  was  reasonable 

16  excuse  therefor;  provided,  that  no  person  not  found  to  be  entitled  to 

17  an  entire  abatement  of  doomage  shall  be  allowed  an  abatement  of  more 

18  than  fifty  per  cent,  thereof. 

1  SECT.  7.     Valuation  lists  and  tables  of  aggregates  shall  be  furnished 

2  by  the  tax  commissioner  to  the  state  assessors,  containing  the  columns 

3  now  required  in  such  lists  for  the  entry  of  personal  property  and  the 

4  assessment  and  returns  thereof,  without  those  relating  to  real  estate ; 

5  and  in  the  valuation  lists  an  additional  column  shall  be  provided  for 

6  entering  the  amounts  on  which  doomage  is  assessed,  which  amounts 

7  shall,  for  purposes  of  taxation,  be  classed  as  personal  estate,  and  be 

8  also  included  in  the  amount  thereof  stated  in  said  list ;  and  two  columns 

9  shall  be  provided  in  the  tables  of  aggregates,  in  one  of  which  the  state 

10  assessor  shall  state  the  aggregate  amounts  on  which  doomage  is  assessed, 

11  and  in  another  of  which  he  shall  state  the  amounts  of  doomage.     He 

12  shall  use   such  valuation  lists  in  the  assessment  of  taxes  on  personal 


214  APPENDIX  I.  —  C. 

13  estate,  and  make  up  and  return  the  tables  of  aggregates  as  to  such 

14  estate  and  amount  assessed  for  doomage,  and  the  details  of  such  taxes 

1 5  and  doomage,  to  the  secretary  of  the  Commonwealth. 

1  SECT.  8.     Each  state  assessor  shall,  as  soon  as  may  be,  commence  his 

2  valuation  list  by  placing  therein,  against  the  name  of  each  tax  payer, 

3  the  amount  and  value  of  his  personal  estate  to  be  assessed,  with  the 

4  details  thereof  now  required  by  law  to  be  stated,  and  also  the  amount 

5  upon  which  doomage  is  to  be  assessed,  but  without  the  tax  rate  or  the 

6  amount  of  tax  assessed,  and  shall  forthwith  thereafter  notify  the  tax 

7  commissioner  and  the  supervisor  of  his  district  when  such  work  shall 

8  have  been  completed.     The  tax  commissioner  or  the  supervisor  of  his 

9  district  may,  if  he  deems  it  necessary,  revise  and  change  the  lists  or  the 

10  amounts  and  valuations  therein  stated  to  make  the  assessment  conform 

11  to  the  law  or  facts  of  the  case,  the  decision  of  any  supervisor  being 

12  subject  to  revision  by  the  tax  commissioner.     If  the  tax  commissioner 

13  shall  deem  it  necessary,  he  shall  require  any  valuation  list  to  be  trans- 

14  mitted  to  him  for  revision. 

15  When  the  tax  commissioner  shall  have  determined  the  rate  at  which 

16  the  tax  is  to  be  laid,  he  shall  return  all  valuation  lists  he  may  have  to 

17  the  state  assessors  and  notify  them  of  the  rate,  and  they  shall  complete 

18  their  lists  for  commitment  of  the  taxes  for  collection  to  the  tax  collec- 

19  tors  by  entering  the  details  of  the  taxes  and  doomage  at  the  determined 

20  rate  upon  the  valuation  as  established. 

1  SECT.  9 .     The  assessment  of  real  estate  shall  be  made  by  the  assess- 

2  ors,  including  the  state  assessor,  as  heretofore  required  by  law,  at  such 

3  rate  as  shall  provide  the  revenue  required  to  be  raised  in  the  respective 

4  cities  and  towns,  including  state  and  county  and  other  taxes,  as  hereto- 

5  fore  provided  for,  with  overlaying,  after  deducting  one-third  of  the  per- 

6  sonal  property  tax  to  be  raised  in  the  current  year,  and  they  may  deduct 

7  the  amount  of  the  other  estimated  receipts  which  they  are  now  permitted 

8  by  law  to  deduct,  and  after  deducting  also  the  estimated  amount  of  per- 

9  sonal  property  tax  accruing  to  the  city  or  town  from  the  state  for  the 
10  current  year,  which  amount  shall  not,  after  the  first  assessment  under 


APPENDIX   I.  — C.  215 

11  this  act,  exceed   the   actual  amount  of  such  accruing  tax  which  was 

12  received  during  the  preceding  year. 

1  SECT.   10.     The  personal  property  taxes  shall  be  committed  for  col- 

2  lection  to,  and  collected  by,  the  collectors  of  taxes  of  the  several  cities 

3  and  towns  in  the  same  manner  (the  state  assessor  performing  relative 

4  thereto  the  duties  now  imposed  upon  the  board  of  assessors)  as  personal 

5  taxes  are  now  collected  by  such  collectors.     As  soon  as  any  collector 

6  shall  have  collected  personal  property  taxes  to  the  amount  of  two-thirds 

7  the  amount  thereof  committed  to  him,  he  shall  pay  such  amount  of  two- 

8  thirds  to  the  treasurer  of  the  Commonwealth,  and  the  remainder  shall 

9  be  paid  by  him  to  the  treasurer  of  the  city  or  town,  to  be  retained  for 

10  the  use  of  the  town  or  city ;  and  if,  at  the  end  of  six  months  from  the 

11  time  when  the  personal  property  tax  shall  have  been  committed  to  him, 

12  he  shall  have  failed  to  collect  such  two-thirds  in  amount  thereof,  he  shall 

13  pay  over  to  the  treasurer  of  the  Commonwealth  such  sums  thereof  as  he 

14  shall  have  collected,  and  shall  monthly  thereafter  pay  to  said  treasurer 

15  such  sums  thereof  as  he   shall  have  collected,  until  the  amount  paid 

16  shall  have  reached  said  two-thirds.     The  city  or  town  shall  be  liable  in 

17  an  action  of  contract  to  said  treasurer  for  all  sums  which  its  collector 

18  shall  fail  to  pay  him  as  required  by  law,  and,  at  the  expiration  of  one 

19  year  from  the  time  when  the  tax  shall  have  been  committed  to  the  col- 

20  lector  for  collection,  shall  be  so  liable  for  the  full  two-thirds  of  such 

21  tax,  except  so  much  as  in  addition  to  its  own  third  it  shall  prove  to  be 

22  uncollectible,  and  in  such  cases  it  shall  have  the  remedy  against  the 

23  collector  now  provided  on  his  failure  to  pay  a  state  tax.     But  in  case 

24  any  part  of  the  taxes  paid  over  to  the  treasurer  of  the  Commonwealth 

25  shall  represent  taxes  abated,  that  portion  shall,  on  the  order  of  the  tax 

26  commissioner,  be  allowed  and  paid  back  to  the  city  or  town  by  which 

27  it  has  been  paid. 

1  SECT.   11.     The  treasurer  of  the  Commonwealth  shall,  from  the  pro- 

2  ceeds  of  the  personal  taxes,  reimburse  the  Commonwealth  for  all  ex- 

3  penses  incurred  by  it  in  assessing  and  collecting  the  same,  including 

4  the  salaries  and  expenses  of  supervisors  and  state  assessors,  and  the 


216  APPENDIX   I.  —  C. 

5  ratable  share  of  the  expenses  of  the  tax  commissioner's  department, 

6  which  said  commissioner  shall  find  properly  chargeable  to  account  of 

7  said  taxes,  and  shall  distribute  one-half  the  remainder  to  the  various 

8  cities  and  towns  of  the  Commonwealth  in  proportion  to  their  respective 

9  real  estate  valuations  as  determined  by  the  tax  commissioner,  who  shall 

10  for  this  purpose,  with  the  aid  of  the  supervisors  and  the  state  assessors, 

11  revise  their  respective  valuations  to  conform  to  the  facts,  and  one-half 

12  in  proportion  to  their  respective  populations  as  defined  by  the  last  pre- 
13  ceding  state  or  federal  census,  by  which  he  can  at  the  time  ascertain 
14  the  details  thereof. 

1  SECT.   12.     The  provisions  of  law  now  in  force  as  to  abatement  of 

2  personal  property  taxes  shall  apply  in  cases  of  assessments  under  this 

3  act  except  as  herein  modified.     The  powers  of  the  assessors  to  make 

4  abatements  shall,  as  to  such  abatements,  be  vested  in  the  state  assess- 

5  ors,  whose  abatement  shall  not  take  effect  until  approved  by  the  super- 

6  visor  of  the  district  in  which  the  tax  payer  resides,  who  shall  act  under 

7  the  general  or  special  orders  of  the  tax  commissioner.     The  powers  of 

8  the  several  boards  of  county  commissioners  and  the  street  commis- 

9  sioners  of  the  city  of  Boston  and  other  officers  acting  as  county  com- 

10  missioners  in  cases  of  abatements,  as  to  the  abatement  of  personal 

11  property  taxes,  shall,  as  to  assessments  under  this  act,  be  vested  in  the 

12  supervisors  of  the  districts  in  which  applications  therefor  shall  occur, 

13  any  one  or  more  of  whom  may  be  assigned  for  this  duty  by  the  tax 

14  commissioner,  to  assist  in  the  district  of  any  other,  with  all  the  author- 

15  ity  of  the  supervisor  of  that  district,  to  whom  any  party  aggrieved  by 

16  the  refusal  of  a  state  assessor  to  abate  his  tax  may  appeal,  who  shall 

17  sit  for  hearing  abatement  cases  at  such  places  as  shall  be  convenient 

18  for  the  tax  payers,   so  that  none  shall  be  required  to  travel  above 

19  twelve  miles  to  be  heard,  giving  due  notice  of  sessions. 

20  Any  party  entitled  to  make  a  complaint  to  the  supervisor  for  an 

21  abatement  of  a  personal  property  tax  may,  if  he   so  elects,   appeal 

22  under  the  same  terms  and  conditions  from  the  decision  of  the  super- 

23  visor  to  the  superior  court  for  the  county  in  which  the  city  or  town  in 

24  which  the  property  of  such  person  is  assessed  is  situated.     The  pro- 


APPENDIX   I.  — C.  217 

25  visions  of  chapter  one  hundred   and  twenty-seven  of  the  acts  of  the 

26  year  eighteen  hundred  and  ninety  shall  apply  to  such  appeals  and  pro- 

27  ceedings  thereon,  and  abatements  may  be  granted  by  said  court  on  the 

28  terms  and  provisions  of  said  act.     The  provisions  of  chapter  seventy- 

29  five  of  the  acts  of  the  year  eighteen  hundred  and  ninety-five  shall  apply 

30  to  judgments  rendered  in  such  cases. 

1  SECT.   13.     The  supervisors  of  taxes,  when  not  engaged  in  the  per- 

2  formance  of  their  duties,  hereinbefore  specified,  shall,  subject  to  the 

3  direction  of  the  tax  commissioner,  be  engaged  in  the  discovery  of  per- 

4  sonal  property  escaping  taxation,  in  detecting  and  securing  the  punish- 

5  ment  of  persons  making  false  returns,  in  the  instruction  and  supervision 

6  of  the  state  assessors  as  to  their  respective  duties,  in  securing  uniform 

7  valuation  and  just  taxation,  and  in  equalizing  the  valuation  of  real  estate 

8  for  purposes  of  state  and  county  taxes  and  as  a  basis  for  the  return  of 

9  the  proceeds  of  the  personal  property  tax  to  municipalities.     Their  rea- 

10  sonable  expenses,  incurred  in  the  performance  of  these  and  other  duties, 

11  approved  by  the  tax  commissioner,  shall  be  paid  from  the  treasury  of 

12  the  Commonwealth.     Each  supervisor  shall  annually,  on  or  before  the 

13  thirty-first  day  of  December,  make  a  report  to  the  tax  commissioner 

14  of  his  doings  during  the  year  preceding. 


218  APPENDIX   I.— D. 

[Paper  prepared  by  the  Minority  of  the  Commission.] 


APPENDIX  I.    [D] 


MORTGAGE  RATES. 

The  following  tables  give  the  rate  of  interest  on  mortgages ;  on  certain 
selected  securities ;  and  the  rates  received  by  the  savings  banks  on  their 
loans  at  interest. 

Table  No.  1,  showing  the  actual  decline  in  mortgage  rates,  is  obtained 
from  the  Tax  Commissioner,  Hon.  Charles  Endicott,  who,  in  the  years  1880, 
1882,  1883,  1886  and  1889,  took  the  amounts  and  rates  so  far  as  stated  in 
all  new  mortgages  recorded  in  the  State  in  the  first  five  months  of  those 
years. 

Table  No.  2  shows  the  rates  of  interest  realizable  from  investment  in  six 
securities  selected  as  early  as  1882  as  the  barometer  of  general  interest 
decline,  calculated  for  1880,  1882  and  1883,  by  Hon.  D.  A.  Gleason,  then 
State  Treasurer.  For  1886  the  average  between  asking  and  bidding  prices 
in  the  first  week  of  each  of  the  five  months  is  taken,  and  for  1889  the  aver- 
age for  the  first  three  months,  was  taken  by  Hon.  H.  Winn. 

Table  No.  3  gives  the  rate  received  by  the  savings  banks  from  their  loans 

at  interest. 

TABLE  No.   1. 

Decline  in  Mortgage  Rates. 


REGISTRIES. 

1880 

Average 
Rate. 

1882 

Average 
Rate. 

1883 

Average 
Rate. 

1886 

Average 
Rate. 

1889 

Average 
Rate. 

Decline 
from  1880 
to  1889. 

.06.266 

.05.974 

.05.948 

.05.527 

.05.694 

.00.572 

Barnstable,  .... 

.06.466 

.06.165 

.06.330 

.05.856 

.06.037 

.00.429 

Boston,        .... 

.05.924 

.05.349 

.05.261 

.04.765 

.04.977 

.00.947 

Cambridge, 

.06.321 

.05.755 

.05.818 

.05.507 

.05.541 

.00.780 

Dedham,      .... 

.06.319 

.05.899 

.05.821 

.05.335 

.05.405 

.00.914 

.05.991 

.05  516 

.05  368 

05  339 

.05  348 

00  643 

.06.411 

.06  081 

.05  972 

•05  558 

05  724 

00  687 

Lowell,        .... 

.06.099 

.05.880 

.05.951 

.05.490 

.05.332 

.00.767 

New  Bedford, 

.06.414 

.06  183 

.06.311 

.05  989 

05  853 

00.561 

Northampton, 

.06.134 

.05.449 

.05.513 

.05.378 

.05.329 

.00.805 

APPENDIX  I.  —  D. 

TABLE  No.  1  — Concluded. 


219 


REGISTRIES. 

1880 

Average 
Rate. 

1888 

Average 
Rate. 

1883 

Average 
Rate. 

1886 

Average 
Rate. 

1889 

Average 
Rate. 

Decline 
from  1880 
to  1889. 

Pittsfield       .... 

.06.159 

.05.900 

.05.837 

.05.461 

.05.445 

00  714 

.06.283 

.06.031 

.06.048 

.05.831 

.05.779 

00  504 

Salem,         .... 
Springfield, 

.06.301 
.06.123 

.06.036 
.05.677 

.06.020 
.05.526 

.05.677 
.05.139 

.05.760 
.05.234 

.00.541 
.00.889 

Worcester,  .... 
Fitchburg,  .... 

.06.187 

*_ 

.05.890 

.05.782 

.05.623 
.05.300 

.05.509 
.05.490 

.06.122 

.05.632 

.05.605 

.05.170 

.05.300 

.00.822 

*  New  registry,  formerly  included  in  "Worcester  registry. 

The  rates  in  tne  registries  of  Taunton,  Great  Harrington  and  Edgartown, 
not  having  been  taken  in  1880,  were  omitted  from  the  above  table.  The 
rate  in  1889  was  as  follows  :  — 

Taunton,    .        .  05.814 

Great  Barrington, 05.426 

Edgartown, 05.984 

Adding  these  the  average  rate  in  the  State  for  1889  would  be  .05.312, 
showing  a  decline  of  .00.810,  or  about  four-fifths  of  one  per  cent. 
The  total  amounts  of  these  loans  were  as  follows :  — 

1880 $10,268,892 

1882, 16,466,365 

1883, 16,439,518 

1886, 21,282,716 

1889, 26,437,552 

TABLE  No.  2. 

Rates  of  Interest  Realizable  from  Investments  in  Six  First-class  Securities. 


RATE  OF  INTEREST  REALIZABLE. 

Decline 

from  1880 

SECURITIES. 

to  1889 

1880. 

1882. 

1883. 

1886. 

1889. 

Inclusive. 

New  York  Central  6's  of  1887,    . 

.04.620 

.03.750 

.03.920 

_ 

_ 

_ 

Boston  &  Albany  7's  of  1892,     . 

.04.600 

.03.790 

.04.000 

.03.350 

.03.650 

.00.950 

United  States  4's  after  1907, 

.03.630 

.02.870 

.02.870 

.02.440 

.02.120 

.01.510 

Massachusetts  5's  of  1894,  . 

.03.940 

.03.315 

.03.250 

.02.710 

.02.780 

.01.160 

Maine  6's,*  

.04.190 

.03.440 

.03.250 

- 

.03.000 

.01.190 

New  Hampshire  6's,   . 

.04.460 

.03.830 

.03.500 

.03.370 

.03.110 

.01.350 

*  The  Maine  6's  were  those  of  1889  until  1883. 


220 


APPENDIX  L  —  D. 


The  rates  on  mortgages  fell  less  than  those  on  either  of  the  other  securi- 
ties not  affected  by  tax  reduction. 

TABLE  No.  3. 
Rate  received  by  the  Savings  Banks  from  Their  Loans  at  Interest. 


YBAB. 

Total  Amount. 

Mortgage  Amount 
included. 

Rate. 

Decline  per 
Annum. 

1876  »     . 
1877  
1878  

$172,009,000 
166,982,000 
136,469,000 

$121,151,000 
116,241,000 
96  505  000 

.06.819 
.06.461 
.06.249 

.00.358 
.00.212 

1879  

127,696  000 

86  181,000 

.05.995 

.00.254 

1880,     

131,840000 

82  432,000 

.05.681 

.00.314 

1881  

147  975,000 

82  518  000 

.05.349 

.00.332 

1882,     .        

162  510  000 

86  129  000 

.05.240 

.00.109 

1883,     

176  317  000 

92  360  000 

.05.207 

.00.033 

1886  
1889,     

205,060,000 
233,928,000 

112,200,000 
134,936,000 

.04.855 
.04.863 

.00.117 
Increase. 

A  change  was  made  in  reporting  in  1888  by  including  loans  to  national 
banks  ($11,265,078  in  1889)  which  are  assumed  on  information  from  the 
bank  department  to  be  loans  at  the  lowest  rate,  and  are  dropped  from 
the  table  to  make  the  years  compare. 

The  exemption  took  effect  on  the  savings  banks  in  1882.  Their  years 
end  October  31.  The  rates  on  these  great  sums,  mainly  in  mortgages, 
declined  .01.579  per  cent,  in  the  six  years  before  their  mortgages  were 
exempted  and  only  .00.377  in  the  seven  years  after. 

If  the  Tax  Commissioner's  table  could  show  for  all  the  mortgages  of  the 
State  the  amount  of  decline  for  the  year  1880,  say  to  January,  1881,  before 
it  becomes  apparent  this  exemption  would  pass,  as  it  is  shown  in  this  table 
between  October,  1880,  and  October,  1881,  a  period  for  which  the  sav- 
ings banks  were  taxed  for  their  mortgages,*  it  would  probably  appear 
that  the  total  decline  of  mortgage  rates  in  the  eight  years  after  the  exemp- 
tion which  was  expected  to  reduce  interest  charges  did  not  from  all  causes, 
including  the  universal,  exceed  five  or  six  tenths  of  one  per  cent.,  against 
a  full  one  per  cent,  on  other  investment  securities  not  affected  by  this  law. 


*  Savings  banks  were  taxed  on  their  mortgages  one  year  later  than  private  lenders. 


APPENDIX  L—  D. 


221 


Another  comparison  is  to  be  made  by  the  figures  of  the  census  of  the 
United  States.  The  new  mortgages  were  taken  for  the  years  1880  to  1889 
inclusive.  Usury  laws  prevent  the  use  of  the  figures  in  most  of  the  States. 
When  the  law  provides  that  no  part  of  the  interest  above  a  specified  legal 
rate  shall  be  recoverable,  or  fixes  a  penalty  for  usury,  the  amounts  taken 
above  the  legal  rate  are  adjusted  between  the  parties  by  commissions  paid 
for  placing  the  loan  or  otherwise,  and  rates  above  the  legal  rate  are  there- 
fore not  stated  on  the  record,  as  they  are  in  Massachusetts  where  there  is 
no  such  law.  No  comparative  starting-point  is  available.  Thus,  although 
all  would  admit  that  mortgage  rates  were  lower  in  Massachusetts  than  in 
Vermont,  yet  the  stated  average  for  Vermont  in  1880  was  only  5.81,  for 
the  reason  given,  while  in  Massachusetts  it  was  6.06. 

The  only  three  States  available  for  comparison,  therefore,  free  from  such 
laws,  are  Maine,  Rhode  Island  and  Connecticut.  Maine  cannot  be  com- 
pared, because  it  did  not  have  the  great  mortgages  placed  at  low  rates  in 
large  cities  characteristic  of  Boston.  It  is  an  agricultural  and  fishing  sec- 
tion, more  nearly  like  Barnstable,  where,  as  the  table  shows,  the  rate 
declined  less  than  half  as  much  as  in  the  rest  of  Massachusetts.  If,  as 
the  majority  hold,  the  declining  farm  values  prevented  our  farmers  from 
realizing  as  great  a  decline  in  mortgage  rates  as  other  classes,  the  same 
may  be  predicated  of  substantially  the  entire  State  of  Maine. 

For  a  similar  reason,  so  great  a  decline  is  not  to  be  expected  in  Rhode 
Island  or  Connecticut,  where  there  is  no  great  metropolitan  city  like 
Boston,  having  the  mass  of  great  mortgages,  in  which,  as  the  table  shows, 
the  greatest  decline  is  to  be  found.  Their  rates  may  more  fairly  be  com- 
pared with  those  of  Massachusetts,  leaving  out  Boston,  or  with  Worcester 
County. 

The  table  of  rates  is  as  follows :  — 


1880. 

1881. 

1882. 

1883. 

1884. 

1885. 

1886. 

1887. 

1888. 

1889, 

Maine, 

6.27 

6.11 

6.13 

6.16 

6.18 

6.16 

6.11 

6.13 

6.13 

6.18 

Connecticut,     . 

5.91 

5.77 

5.76 

5.74 

5.77 

5.71 

5.55 

5.62 

5.62 

5.54 

Rhode  Island,  . 

6.22 

5.74 

5.77 

5.85 

5.82 

5.69 

5.60 

5.68 

5.71 

5.69 

Massachusetts, 

6.06 

5.80 

5.63 

5.63 

5.56 

5.48 

5.29 

5.37 

5.47 

5.35 

222  APPENDIX   L  —  D. 

Connecticut  starts  with  a  low  rate.  The  tables  show  no  excess  of 
decline  in  Massachusetts  mortgage  rates  greater  than  was  to  have  been 
expected  from  the  causes  stated  independent  of  the  mortgage  exemption. 

If  we  take  Rhode  Island  for  comparison,  we  find  that  in  the  period  1880 
to  1882  inclusive,  when  the  decline  due  to  this  exemption  in  Massachusetts 
must  have  occurred,  the  rates  actually  fell  more  in  Rhode  Island,  without 
any  such  change  of  law  to  help  them  down,  than  in  Massachusetts.  If  we 
take  the  year  1885  or  1888,  which  may  as  well  be  taken  as  1889,  since  the 
excess  of  decline  in  1889  is  not  due  to  exemption,  we  find  the  reduction 
almost  the  same. 

It  seems  to  appear,  then,  that  the  decline  in  mortgage  rates  under  this 
law  has  not  been  substantially  greater  than  in  other  States  under  similar 
conditions  without  any  such  change  of  law.  In  short,  the  mortgage 
exemption  caused  no  appreciable  reduction  of  interest  charges  to  the 
borrower. 

On  the  other  hand,  this  borrower  who  got  nothing  or  next  to  nothing  had 
to  assume  a  new  burden.  The  increase  in  the  general  tax  rate  caused  by 
the  mortgage  exemption  and  the  accompanying  savings  bank  tax  reduction 
rendered  necessary  by  it,  as  estimated  by  Mr.  Winn,  with  the  approval  of 
the  legislative  committee  of  1883,  was  $1.06  per  thousand  of  valuation. 
The  legislative  committee  of  1884  estimated  it  at  $1.64  per  thousand. 
This  the  borrower  had  to  pay  as  an  additional  tax,  not  only  on  that  part 
of  his  land  represented  by  the  mortgage,  but  on  his  equity  above  the  mort- 
gage as  well.  The  equity  may  add  about  a  third. 

It  seems  entirely  plain,  therefore,  that  the  mortgage  exemption  cured  no 
double  taxation,  because  the  lender  suffered  none,  but  involved  an  actual 
loss  to  the  borrowers,  increasing  thereby  the  so-called  double  tax,  to  say 
nothing  of  the  losses  to  the  community  at  large. 


APPENDIX   II.  — TABLE  A. 


223 


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APPENDIX   II. —TABLE   A. 


225 


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APPENDIX   II.  — TABLE   A. 


227 


l>.C<lt--i— iC<ICOi— It^fN 

oo  Oi  oo  r-i  i— i  oq_ -^  co  I-H^ 

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APPENDIX   II.  — TABLE  A. 


229 


CO  ^  CO  i-H 


O  O  C^l  CO  *£3  O  t^-  I   I>-  O 

t^-COOii-H-^t^-t^-  O*O 

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230 


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APPENDIX  II.  — TABLE   A. 


231 


»£3OOl~—  Oi-Ht 


l  O         C<1  i—l  CO 


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oci- 

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232 


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APPENDIX  II.  —  TABLE   A. 


233 


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•<*<  O 


CO  t~- 


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s:gr 

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l>-  CD  Ci  t— (  TjH  CO  C^         CO 


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2      2-35     III 


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s. 


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234 


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CO  O5  t^-  tO  Oi  »O  O  00 
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APPENDIX  n.  — TABLE  A. 


235 


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236 


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APPENDIX   II.— TABLE   A. 


237 


'  i-H  OS  lOi-HdOiOSiO^C^iO 


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APPENDIX   II.— TABLE   A, 


239 


O  O  id  lO  O  I-H  O  C^l  O 

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240 


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APPENDIX   II.  — TABLE   A. 


241 


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242 


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1    Is 


*3tfl!?8§S^!3-g2fe        H 


S    -3 

on        fl 


flllf 


fl        H 


APPENDIX   II.  — TABLE   A. 


243 


CO  CO  »Q  •*f  CO  O  O  t^-  CO  »~H  i-H  ( 

o~co'— Tco"c<i.-ri-rao'co"'     .-r     c<J 

t^  ^H  t^  r-l  ^ti  O  <M 

CO(M_^         CO 


CO 


C<JOTt<i—  (COO1>. 

r—  1  OO  "*  O  "*  i—  1  O 


Oi 


OO 


O  CO  lO  •*  CO  rf<  O     1      1      1      1      1 
O  CO  i—  i  <T<I  i—  1  O5  OO 
i—  I  OO  CD  IO  CO  rt<  i—  1 


§  S 

*  & 


lOO    I  O 

S5fe     53 

»cT 


OO     lO 

ioc<i      Tt< 

t—  CO         C<I 


cT          i-T 

*    s 


T3 

•  fl 


I-  I  1 

gl-!-5 


244 


TAXATION  REPORT. 


OOCO<NO50O    I 


CO<NO50O    IO 


§      III  '  '  '  '1 


CO-*0<NO<MCO^     10     1      1 
C<1  CO  O  O  Oi  ^H  CO  f_        ,_( 

-*t^*M.-Ht^O         O         O 


c 

O  CO  O  i—  1 

g  of^ 


OOOOO  IO     1  O  O 

O  O  O  C<)  <—  i  b-        ^£  O 

CO'C^I-H'     o~  TjT 
*° 


TjT 
°* 


g" 


O  •»*<  <M  i—  1     |CO     lOO     1      1 
0  10  CO  CO        O        t~- 


05  Tjcfi          05  _,  OS 


So        5    £    3       n 

r-H  TjT         r-T  CO~ 


ut>o»oo»raot^io   i    iio   i    i 

t>.  IO  CO  ?D  CO  CO  CO  OO      O5 


<M       O  1   1  1  O  I 

O       O        O 

" 


Ok 
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l>-  CO  CO  »—  1  C<)  CO    t>- 


O  1  (M  1   1  0 
O    C1^      C"l 


t^-  O  OO 

oo"    t>r 


»—  iC^SOt—  li—  i 
r—  1  CO  O  CO  i—  (  • 


00 
O 


_      _ 
co"     co" 


OOlOOO 
OOC<IC<ICO 


OOOOIOO 
COTt<Ot^-        COO 

O5  CO  CO  CO         t^.  CO 


O  OOO     1  O     1      1 

•^f  O  O  t"—        O 

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.ss 


•;•*  •'2  •••;*«•«  1 

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s  El  Itlfl' 


ls« 

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.   ** 

a  '-3 


tt         if  •  -S      ® 

Hflfl  -s 

llll  1 


i 


i 

•fcc 
c 

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I 


Total  pe 


APPENDIX  II.— TABLE   A. 


245 


t—       O 


C^  G 


i  C<l  O        CO  00 


CO     I  O 
t-        X) 

CO         •* 


I  000000 

««wg 


§l  o  m  10  co  i— 1 1— i  oo 
t>-  co  Oi  »ra  co  «>-  CD 
co^  ^o,^  co  co  oo   ^ 

"      " 


§8  '  'S 


>O    i— I 


co  c<j 

»O  00 

tC          o" 


OOiDCOOJNOS 
•*£aOr-*          ~*£r- Ti— T 

cooio      c<i 


O    I     I      I      I      I     I  O 

S  s" 


0000  1 

C^COO-^ 
•>f<  CO  OO  CD 


100 

i—  I  O 
COCO 


CO"         r-T         OOl 

»         ^H          ^ 


O  ^  O  O  Is*- 1— '  O  CD     I   O     I      I 

1 


3 


I     I    I    I     I    I  IQ 

« 

N 


..---- 

5 1  .-a  3 ..  £ 


£  -3 

,s  I 

1  8 

,§  a 

r M  >2 

1    Cli  ^ 

I  o  '5b 


.1?' 


•*•! 

•I -I 


5  43  * 

g  a  « 

6  MI  a 

1  !  1 


246 


TAXATION  REPORT, 


!8iS§§! 


ICOCO        O  CO        CO 


«l 


>  O  »G>  O  O  O  XC5     I 

> »~  t^  o  r-«.  t>.  co 

I  CO  O>  CO  O  i— I  CO 


co~co"  GO  CD" 


r^jT     \ci      n  r-T 


ff$ 


I  * 


t>-  00 

f     cf 


"OOOCOOiT*     I      I      I   »O     I      I 
)»Ol>.CO«OOOO  CO 

I  C<>  CO  ^^  O  CO  O  OO 


-t  >0     I  CO     I      I      I      I  <M 

5  CO        «0  3 

S        S    -  2 


)  O 
)  r*H 


I  O    I 

us 


sf 


co" 
co 


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€»  €» 


iO>O  t>-    I   CO 

OOr-TtC         CO" 


§  ^c^2   '£  '§2 

t—  CO  O  »O         r-H  COO 

g"  gcf  2  *  sm 

€& 


g 


OOOOOOCO     IO     I      I 
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1 »       -3 

i,1i--lii! 

'fc'*0  "i  •.•^itfff  5 

cSWOOojOJCCpqOOccO 


filf  .88  S 

•3  C  H      s   *>-9  M 

Jtf-l-i  I 

QQ  r«  fl  ??     -**^         PL,  *£c 


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(    .^H    ^       Q^      QJ  fj 

IS"§§18 


I 


APPENDIX  II.— TABLE  A. 


247 


»O     t   O  iQ  IQ  O  CO     I 

TH         O  GO  CO         Ci 

8    " 


oooomoooo  10 

»OOi— li-H-^f-'^CiC^-**'  t~~ 

TH  O  I-H  CO  I-H  Oi  O        C^  CO 

1         " 


O  CO  Oi  I-H 

CO't-r        CO'i 

CO  CO 


id  o  o  i  o 

t^-Oi-H  o 

t^»  O  CO  r-H 

<N~         C^  r-T 


§         5 
£        % 


I  a 


t^  »o 

t>r        o" 
*"        » 


IS    £ 


" 


O    I     I     I     I 


I 


I      I 


1-1  "^.t^,1~l  ^""l"  ~ 

CO          i-H          i— I 


00  «     •      «      1      • 

b-  t>^ 

^.  *" 


O  O  O  O  ^t4  O  Gi     I  iO    I      I 

ocT  c<f     cT 


)  t— I  t^  CO  l£3  CO 

>  cs  i-^  eo^  ""l1^ 

PoTt^  cT  oTt>T 

KTq  k£S  "*  (Nr-l 


OO 


OCO     I  O     I      I 


^   « 


g      3 

i     | 


...  .«-? 

S       I    la    I 

-       - 


1  ...... 

•if---*-* 

•I!!-!  -I 

* 


& 


Hill!  1  I 

.<aa      -s 


248 


TAXATION  REPORT. 


i  oo  — •«  Oi  10 ' 

Ci  OS  1Q  i— *  ' 
UO  CO  O  •*  i 


ll 


^H^f 


O  C 
Cc 


b~ 
00 


O  lO     1 


C^  O  O  GO  »O  O  t~^»  O  CO  1  O 

»O  O  >O  CO  «O  OO  TJH  ,—  I  CO  t^ 

t~~-  O5  ^COrHC^CO         OO  <M 

co~i>Tc6~     fr--^     i-T  t>T 


ll 


m  o  o  10  o  i—  i  o  i—  i  I  i>-o  i 

i—  lOCOCOt>-Tt<OOt^        COO 

i—  i>f3THi>.ooa5i-Hi>«      -^>ra 
Ttrco"     cTr-T  t-Tco~ 

HO>'«N        <N 


cTio'oo'i^c^i-H'i-r  r-T 


OO 


OO     IO 


ilOiOOSCO 

"~ 


OOO>C 
iOCOOiiO 

cfco" 

co 


TH 


cTt^'oo'cr 

IQr-H          rl 


O^OiOOOOOO    IOO    1 
l>-  (N  t>-  OO  r-l  CO  <M        >O  »O 

O  i—  1  OO  Tt*  C<l        00        OOO 


coco      ai- 


® 

S       .  »  .  *      "3 

O      «k       «>        d  rt 

'^TS        C        5 


sj.f-l   I 

E.  S  _rin      ft       bo 


•:••!  11! 


.s«§l  - 


APPENDIX  II.— TABLE   A. 


249 


- 

O5  »O 


O  O 

O  Oi 
O  •* 


1  i—  i  O  O 

r-^  c<j  co 

"      ~ 


0  o  o  o   i    i 


1   1 


tg.        S. 


§O«OOOOiO 
l>-  CO  i—  1  t>-_<b  Ci^ 

§"r*c:>      t-T     ,-T 
i-HCO          r-l 
f-H  CO 


g§B 


t>t 

Mr-l 


r-TaT     Oico"     c<T 

a*    I-  r 


OOOOOOO     1  (M     1      1      1      1 


O  (M  O         (N  ^H 

i-t  O«M        i-H 


» 


$      8 

i   I 


r-To"ar     co"  aT 


O 


s     1 

I      "3 


•  -    •••  -- 

- 


illiilffillit  s 


'lira'i  i 

•IP  "I  •-  s  a 

g  5  tS      J      ^  g^  ^ 

•  c  8  w    •  >    *  £  -2 

«"*«-•"  .a    I  s  "3 

S  ?9  fi.S_rI_      a  to  g 


•K   »  | 

sls-s-ajs  .2    -S 

a    3 


250 


TAXATION  REPORT. 


IO  OO  O  OS  TH  O     IOII 


>  O  CO  »O  OS  C<I  O  CO  *O         Tfl        C<I 

I'C^TOS'     oo^i-Tco"     c^"     co"     ccT 


" 


gs 


flp 


(N  (MCO 


CO 

T*< 


c^  lo' 


coco      co      cooo 


IO  O  O  O  10  O  iO    |»O    IO    1     1 
•*  O  O  C<l  OS  i—  I  CO        t>.        rj< 


^ 

cT 


ooooorot^omoo  i    i 

^^S^^oS^    SSg 

s§s?f  s  ^ 


OiOIOIOI     1     IOI      1 


OIO 

O        kO 


lO 


°° 


OOO  IO  |IO 

C<J-*^H  «o  10 

CO         ^  Tf<  C<J^ 

rjT     co"  <n 


O  O     1 

^7  ^ 


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fl       S 


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tf.f*  I 

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<n     .   > 

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ISIII 


5 

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! 


APPENDIX   II. —TABLE   A. 


251 


?OO!M         CO  i— I  CO         C<l         C<l  CO  C<J 

1<NO         CO  00 


i  O  •*  O  SO  CO  i— i  <M 

I  CO  CO        OO  C<l  O  ^H 

KMCO  ocoo 

" 


CO  O 

I   & 

*•     ft 


8 'g '  '3  '£ 

Tt<         CO^  00^       CO 

CD"     oo"  lo"     »o" 

^H         CO  00         CO 


^ 


O  CN  C<J  CO  t>- CO         CO         CO 

oTo"     io"     .-T     ^-T     co" 


g 


IOOOOO     IO     I   i— I     IO     I 
(N^O^HCN        00        CO        £3 


SiOiC 
CO  CO 


COOOS^^O 
CQ  rt<  CO  CO         •<f 

oo" 


(MO 

O  O 


O  O  O  10  O    I   IO    I      I     I  O     I     I 

cTco^cT     t>T     T*T  cT 

t^^H  CO  r-l 


«      g 

i.     I 


S2< 


IS  '  ' 

^co_ 

"co" 


-2      "3 

®     s 


•^22  -S  •- 

2s.?>   1    s 


oToS       ^J 
.  r     T;  Q,      X5 


_ 


^1  ^ 

111  1 


I  1 

fl  O 


s  J 

fS^g^O^P 


252 


TAXATION   REPORT. 


§O  lO  1   »O  O  GO  t—  CO  1   CO  i—  I 

O  t-  -*  GO         i-l  Oi  t^O 

-J.'-i-l  «_                  --H  CO^ 

co  CO~I-H  i—  T  t>TaT 


O  O  O  >O  lO  lO  »O  i 

o"i— To"     CD"     TjT 

COCOCO          i-H 


»o  o 

C5  O 


O  O     1      1 
f—  C<1 

co"  CD" 


oT  i— "lo'cTcr     ao"co~cb" 


toooioioio 
>O  »O  lO  »O  •*  t>- 

Sfrf    ^ 


O         CO 

CD"     10" 


C<1 


SOOOOOO 
O  CO  O  Ci  I-H  O 
i-H^t^O  ^<  CO^ 

'     co" 


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gew 


OiOOCOCOb-  IOOC<I 

<  O  O5  Tf  Oi  00  i—  I  l>-  lO  •<*< 

i-H  Ci  O  O  t^*  O  00         C-l 

' 


c5oO(M        CD 


s 


OCO 

CO  i—  t 


(M 

CO 


I   O  O     I      I  OO  t— 

CO  O  C5  "^  O5 

oTco"         o'lo"-*1 


OOO>OXO>—  i 
»QOOO5C<I»O 


OOO^iOOOO     I      10 

co""*'co"     co"i-Ti-r  CD" 

COt^T*<        i-l  <M 


o  *o  o  o  o  *o   i  o   i  o  o 

iO  i—  <  <N  CO  CO  O3         CM         Tt^O 

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3     . 


Jl 

|i 

iniii 


S  .|       S3 

-°^S      ^      I 

*r     fl   .  S      ^ 


S     « 


S'l     I 


a.- 

c3  o  c  a-S  o  § 

Illllill 


APPENDIX  II.— TABLE    A. 


253 


O  *O  O  O  O  CO  O     IOO*O     1 

»O  »O  O  l~-  CO  CO  CO         t»  O  «O 

"        ~ 


1     1      1  O    1 


eo  10 

CO  CO 

Jf 


O  O  O  »O  O  O  O  O     1    »O  O  O 
IO  O  O  <M  C<l  O  C<)  C<)         <N  O  O 

ccooOi  c.—  <  co  co  t— 


I   O  10  O  >O 


>o  o 

>  OJ  O*  CO  2 

te's? 


C^J  l>-  CO  CD  *rf  i—  t  C^         O*l 
^r-H^CN  t>-  1—  t  T)<         (M         C5  i 

co"ob"i>r     CD"  i-T     co~ 


co 


8 


«  •  '  '     ' 


^oTio"c<fcD>i-<"         i-T     oT- 

OiOOCO         ^H  (M 


O5  COCDO         COO         ^ 

g      sas  "'^  s 


I      S 

I   I 


3        g  '  '  '  ' 

t-  CO 

cf          g? 


t-~-  < 

QO  G 

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- 


O  O  O  O  O  l^-  O^  O^ 

CD" 


co"      co" 


SlO  »0  O  O  >0 
iO  l^  CO  CO  (M 

^  t~-  iO  CO  OO  CO  CO 

o^t^c^     »o" 

-CDC<) 


•las -I 

^  g  S     g 
rS§    ~  .fl 


254 


TAXATION   REPORT. 


co~c<f 

COCO 


- 


t£       <M~        Of 


CO 

& 


oocoo 

O  10  •*•* 
OO  lO  GO 

sfss'sf 

CO  CO  CO 


i»   I    I    i  »oo 

CO  T*  O 


)  lO  CO  TH  C3  ^  C^  ^f  ^O  Oi  C^l 

>  i— 1  )-H  O  r-H  i— I  f-H  CO  i— I  <-N 

)  l>-          C^  ^C  i-H 


Oi  ^f  "^  *O  l>-  I-H  O 


moooo   IIMOOO  I 

(NC<>GiCOI>.        <NW5i—  I 
O  •—  (  •*&  C<1  C<l        -<ti        (N 


Oi—  lOOt^-'Oi—  1     Itf3 

<M  O5  TtH  r-H  ^H  t-  <M  1-1 

CO  O  Cft  C5  O^  i-H  CO         O 


Tt<  COt^rHO 
(>)          (M 


h-i-H        00  10 

€©=  CO 


€» 


cT     p-T 

^ 


O-^C<1OQ 

^Tof     of 

CO 


s 


"1 


t^ 


CO*" 


tOC<IO>OOOO-^  IQOO 

CO  -^  O  -^  •*  t--  t^-  t^  Oi  Tfl 

O5  r-~  •*  CO  »C  CD  i—  1  Oi  Oi  r—  1 

(N  of  1-^       t>T  ^H" 


O  O 

rH~  C<T 


J. 


•  *       « 
2       c 


IS?  1 

^  §  §    fl 


I      i  i|  | 

'•*i  *'**§*  2fi      * 

-r!  «     --1  ^0 


APPENDIX   II.— TABLE   A. 


255 


CO  O  c3  O5  O5  «O  CD 
Tf  CN  CO  CO  CO  ^t<  CO 


I         * 


I      5 
£      *" 


3 


rSSoS  '{§  '  ' 


S        § 


I      I      I      I      I      I    10 


§oooia 
O  ^  00  r-H 
i—i—l  C5  r-(  OO 


i-ics      o«i-       ^ 


§     S  'I 
8      a  ^ 


t—  occtMi— (C<jco 

CO  1— H  (N  OO  »O  Tt^  1— I 


s 


. 

i-  c<i      eo" 


iOO  10  O  r-1  r-i  C5  O  **O  1Q     I      I 

r^iOCOCOiOOiO3C<liOiO"*l 


O  O    I 

£        3 

a      gf 


§OO  Or-H^H 
00  •—  I  "*  O  O5 


O  O5         C<l        l"- 

OO        O>        00 


EO  t^-        IO  ( 
—  - 


>  IO  »O  O  O  'O  >O  O     I  »O    I      I 


%      3 

I— I  l>- 

€©=  €©= 


CO  OO  i— i  t-- 

oo"-T 


O     I  O     I      I      I      I   »0 

10        PH"  CST 


8      1 
"3      £ 


"58.     3 


|||gf|.s|||||| 

^SaooScc^^oo^o 


(JJ'rH^lD< 

§3  o  c  C'9 
•2 


256 


TAXATION  REPORT. 


QOt-~< 


•^COCO         -* 


>PS  I 

CO         O5 


•*  i—  I 

0 


s 


cT  io~     c$ 


^  Oi  Ci  t>-  iQ  Oi  O  CO  "^  O        r—  ( 

Oi  Tj<  ^H  O  CO  l>-  i-H  -^  rH  !>.  CO 


§ 


I      1      1      1      1  0     1  0 


i 

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IC3  *O  O  O  O  C^l  >d  O     1   O  O  lO  O 

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C^  QO  GO  C^l  O         CO         ^ 


--:    I   i-    I     I 


IO        CO 
CO*       CO*" 


So 


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r-r<N~cT     CD" 

r-l»0<M 


IOOOOOTCOOOO»OI      1      1      1 

r^o-^Oi—  iTtiTt<c<ico 

CO  r—  I  i—  1  r-H  ^  CD  ^T          C<l 


co 


OI      1     1      1   O 

t--  o 

•*  i—  1 

co" 


Mtl»C5iOIO 

§1^-  lO         O  l 
O  Oi        -^ 

^ 


x 

GO" 
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i-Tco^o"         >o"inTi>r 

Q&:       CO  CO<N-H 


o  o" 


I  1 

<o         fl 


APPENDIX   II.— TABLE   A. 


257 


10  0  O  lO  lO  (N 

!>•  O  «O  CO  <—  I  •* 

oi-o>  e-Oi  • 


co"     t-T 


si 


o»f;oo-^"e 

O  GC  1^—  "^  t^-  C 

'' 


O 

O 


»—  1  O 


^lOCO  I   COOOO 

i— I  O  ••*!  t--OOt^. 

»o  c^co  co  o  co  co 

cT-^co"  co'oo'co'b-^ 


O  h-  O 

iccceo 


t>-  >O  GO     IO     1      1 


O  O  ^  i~  "^  GO  C<l  OS  OS     1   O     1      1 

SooKScoooposiaci      i—  i 

GO  GO  CO  ^  Tt<  CO  CO  CO  -^         O 

CO'IM  o"     TjTof         i-T     co" 

(M  (N  0          rH  <M 


^» 

CO 


cc  it  -?  'o  c^i  o  o  i—  t  o      o 

" 


lilS  '  '  '1  '  ' 


O5  00 


1      1     1     1     1      1  O 


, 'O     . 

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Tota 
Total 


258 


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ggfa  s" 


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rcO~r4"^!-r  r-T 


0     1  00 

rH          O  i-H 


S        2 

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co  o  oo  -<ti  -$<  c<i  t>- 

»  §?  w" 


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ugh. 


'  '  '  '8  'S 

CO         O  " 


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APPENDIX  II.— TABLE   A. 


259 


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APPENDIX   II.— TABLE   A. 


t>. 


S        2 

05  <X> 


o  o  -*f  >— i.— 1010-* 

CO!NOOTtlO<MOO.-l 
«T       00"       <N^~ 


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APPENDIX  II.— TABLE   A. 


263 


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APPENDIX   II.— TABLE   B. 


265 


266 


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APPENDIX   II.— TABLE   B. 


267 


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APPENDIX   II.— TABLE   B. 


269 


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APPENDIX   II.  — TABLE   C. 


'271 


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APPENDIX  II.— TABLE   C. 


273 


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APPENDIX   II.  — TABLE   D. 


303 


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310 


TAXATION  EEPORT. 


TABLE   E. 

Showing  the  Effect  of  Certain  Proposed  Readjustments  of  the  Tax  System 

Towns.     (3)    TJie  Farming 


CITY  OR  TOWN. 

PLAN  I.  —  RETENTION  IN  STATE  TREASURY 
OF  CORPORATE  EXCESS  AND 
STATE  ASSUMPTION  OF  COUNTY  EXPENSES. 

Loss  to  the  city 
or  town  by  retention 
of  the  Corporate 
Excess  —  1896. 

Gain  to  the  city 
or  town  by  assump- 
tion of  County 
Expenses. 
County  Tax,  1896. 

Net  Gain  or 
Loss  as  a  result  of 
Plan  I. 

1 

2 
3 
4 

CLASS  I.  —  Cities. 

$25,232  69 
856,245  48 
7,565  85 
69,208  71 

$13,362  32 
942,879  00 
28,652  88 
78,321  11 

—$11,870   37 

+  86,633  52 
+  21,087  03 
-f-    9,112  40 

Cambridge,   .... 

5 

Everett,         .... 

1,538  60 

12,350  63 

-f  10,812  03 

6 

Fall  River,     . 

17,603  97 

102,684  19 

+  85,080  22 

7 

Gloucester,    .... 

9,178  78 

14,008  73 

-f    4,929  95 

8 
9 
10 
11 
12 
13 
14 

Haverhill,      .... 
Hoi  yoke,        .... 

14,291  51 
25,071  15 
69,823  67 
26,023  77 
4,207  97 
22,355  45 
58,320  48 

18,509  16 
37,470  20 
70,288  17 
44,006  47 
8,309  06 
15,639  11 
85,061  14 

+    4,217  65 
-f  12,399  05 
-f       464  50 
+  17,982  70 
+    4,101  09 
—    6,716  34 
-f-  26,740  66 

Lowell,  ..... 

Lynn,     ..... 

Marlborough, 
Medford,        .... 

New  Bedford, 

15 

Newton,        .... 

83,595  32 

46,013  65 

—  37,581  67 

16 

Northampton, 

10,793  90 

15,885  99 

-f    5,X)92  09 

17 

Somerville,    .... 

16,930  28 

43,327  63 

+  26,397  35 

18 

Springfield,  .... 

98,867  78 

80,829  55 

-  18,038  23 

19 

Worcester,     .... 

132,541  55 

105,876  00 

—  26,665  55 

CLASS  II.  -Prosperous  Towns. 

20 

Barnstable,    .... 

4,774  69 

3,878  28 

—       896  41 

21 
22 
23 
24 
25 
26 
27 
28 
29 
80 

Belmont,        .... 

5,362  85 
10,247  49 
8,738  03 
9,521  72 
13,889  64 
5,731  35 
2,257  20 
21,187  36 
43,830  79 
19,623  42 

3,790  28 
3,446  00 
4,217  28 
4,720  31 
6,169  99 
2,937  04 
4,715  20 
6,832  31 
14,089  14 
5,607  45 

—     1,572  31 
6,801  49 
—    4,520  75 
—    4,801  49 
7,719  65 
—    2,794  31 
-f-    2,458  00 
—  14,355  05 
—  29,741  65 
—  14,015  97 

Concord,        .... 

Dedham,        .... 

Falmouth,      .... 

Manchester,  .... 
Milton   

Nahant,         .... 

APPENDIX   II.— TABLE   E. 


311 


TABLE   E. 

on    TJiree    Classes  of  Localities.     (1}    The    Cities.     (2)    The  Prosperous 
and  Manufacturing  Towns. 


PLAN  II.  —  ABOLITION  OF  THE  LOCAL  TAXATION  OF 
SECURITIES  AND  THE  DISTRIBUTION 
OF  THE  PROCEEDS  OF  AN  INHERITANCE  TAX. 

Net  Gain  or  Loss 
to  the  city  or 
town  as  a  result 
of  both  Plans. 

PLAN  III.—  HABI- 
TATION TAX. 

Loss  to  the  city  or 
town  from  Taxes  as- 
sessed on  Intangible 
Personalty.     Cities, 
1896;  towns,  1895. 

Gain  to  the  city  or 
town  by  the  distribu- 
tion of  $2,500,000 
from  the  proceeds  of  the 
Inheritance  Tax. 

Net  Gain  or 
Loss  as  a  result 
of  Plan  II. 

Gain  from 
Tax  on  Occupiers 
of  Habitations. 

832,013  51 

$12,267  99 

—  f  19,745  52 

—$31,615  89 

1 

1,280,373  38 

715,928  56 

—564,444  82 

—477,811  30 

+$500,000  00* 

2 

5,266  32 

29,517  27 

4-  24,250  95 

4-  45,337  98 

- 

3 

143,567  78 

80,169  91 

—  63,397  87 

-  54,285  47 

** 

4 

3,672  75 

16,813  19 

-{-  13,140  44 

4-  23,952  47 

- 

5 

8,851  05 

81,047  40 

4-  72,196  35 

-j-157,276  57 

- 

6 

7,849  06 

22,097  33 

+  14,248  27 

4-  19,178  22 

- 

7 

15,918  17 

25,853  51 

4-    9,935  34 

4-  14,152  99 

- 

8 

13,509  66 

35,389  73 

4-  21,880  07 

-f-  34,279  12 

- 

9 

52,471  43 

77,377  54 

4-  24,906  11 

+  25,370  61 

- 

10 

67,271  31 

56,021  05 

-  11,250  26 

4-    6,732  44 

- 

11 

1,610  40 

12,142  58 

4-  10,532  18 

4-  14,633  27 

- 

12 

24,515  36 

15,672  74 

8,842  62 

-  15,558  96 

- 

13 

108,950  38 

53,754  90 

-  55,194  48 

—  28,454  82 

** 

14 

135,044  32 

35,957  81 

—  99,086  51 

—136,668  18 

** 

15 

12,558  38 

13,733  49 

-f    1,175  11 

4-    6,267  20 

- 

16 

19,203  80 

51,416  00 

4-  32,212  20 

4-  58,609  55 

- 

17 

64,355  33 

55,646  81 

—    8,708  52 

—  26,746  75 

** 

18 

81,583  32 

95,254  24 

4-  13,670  92 

—  12,994  63 

** 

19 

8,350  43 

3,606  09 

—    4,744  34 

—    5,640  75 

t 

20 

13,085  10 

3,005  99 

-  10,079  11 

—  11,651  42 

t 

21 

12,206  81 

2,708  88 

—    9,497  93 

-  16,299  42 

t 

22 

9,459  58 

4,215  49 

—    5,234  09 

—    9,764  84 

t 

23 

10,681  17 

8,272  58 

—    2,408  59 

—     7,210  08 

t 

24 

24,619  55 

2,633  86 

—  21,985  69 

—  29,705  34 

t 

25 

10,351  65 

1,951  79 

—    8,399  86 

—  11,194  17 

t 

26 

8,813  01 

2,869  98 

•    5,943  03 

—    3,485  03 

t 

27 

26,588  48 

2,641  72 

—  23,946  76 

—  38,301  81 

t 

28 

75,305  30 

7,122  77 

-  68,182  53 

-  97,924  18 

t 

29 

15,526  50 

1,742  87 

-  13,783  63 

—  27,799  60 

t 

30 

*  Estimate  based  on  assessors  returns  of  valuation  of  dwelling  houses. 
**  These  cities  would  receive  large  sums, 
t  These  towns  would  receive  considerable  sums. 


312 


TAXATION  REPORT. 


TABLE  E  — Concluded. 


CITY  OR  TOWN. 

PLAN  I.  —  RETENTION  IN  STATE  TREASURY 
OF  CORPORATE  EXCESS  AND 
STATE  ASSDMPTION  OF  COUNTY  EXPENSES. 

Loss  to  the  city 
or  town  by  retention 
of  the  Corporate 
Excess  —  1896 

Gain  to  the  city 
or  town  by  assump- 
tion of  County 
Expenses. 
County  Tax,  1896. 

Net  Gain  or 
Loss  as  a  result  of 
Plan  I. 

CLASS  II.  —  Prosperous  Towns 

—  Con 

1 

Northbridge, 

$14,884   50 

$4,230  00 

—$10,654   50 

2 

Stockbridge,  . 

6,509  10 

4,913  27 

1,595  83 

3 

Swampscott,  .... 

15,274  01 

5,336  30 

9,937  71 

CLASS  III.  —  Farming  and 

Manufacturing  Towns. 

4 

Ashland  

347  37 

1,230  04 

4-       882  67 

5 

Attleborough, 

1,703  14 

7,594  01 

-j-    5,890  87 

6 

Bolton,  

58  77 

554  00 

4-       495  23 

7 

Bradford,       .... 

1,430  09 

2,373  49 

-f       943  40 

8 

Charlemont,  .... 

17  91 

585  17 

4-       567  26 

9 

Clinton,          .... 

1,916  88 

8,111  00 

+    6,194  12 

10 

Colrain,          .        .        .        . 

364  20 

877  74 

4-       513  54 

11 

Cummington, 

176  56 

494  06 

-f-       317  50 

12 

Egremont,     .... 

208  04 

752  92 

-f       544  88 

13 

Gardner,        .... 

1,995  04 

5,923  00 

4-    3,927  96 

14 

Goshen,  .        .... 

3  27 

228  03 

-f-       224  76 

15 

Granville,      .... 

120  09 

516  59 

-f-       396  50 

16 

Hawley,         .... 

6  87 

256  00 

4-       249  10 

17 

Heath,    .        . 

51  00 

292  58 

-f       241  58 

18 

Holliston,       .... 

652  92 

1,732  10 

-\-     1,079  18 

19 

Hudson,         .... 

816  38 

2,987  24 

4-    2,170  86 

20 

Lakeville,      .... 

720  74 

764  53 

I                * 

-f-         43  79 

21 

Millbury,       .... 

813  54 

2,801  00 

4-     1,987  46 

22 

Monroe,         .... 

57  82 

219  43 

4-        161  61 

23 

Mt.  Washington,  . 

- 

118  87 

4-        118  87 

24 

New  Ashford, 

- 

118  87 

4-        118  87 

25 

Palmer,  

1,062  09 

3,994  98 

-f-     2,932  89 

26 

Plainfield,      .... 

103  11 

266  03 

4-       162  92 

27 

Shelburne,     .... 

385  39 

1,353  19 

-f       967  80 

28 

Stoneham,     .... 

1,606  26 

4,066  67 

4-    2,460  41 

29 

Stoughton,     .... 

2,316  18 

2,171  70 

144  48 

30 

Templeton,    .... 

614  70 

1,634  00 

4-     1,019  30 

31 

Wellfleet,      .... 

1,915  03 

780  69 

—     1,134  34 

32 

Wendell,        .... 

- 

344  83 

4-       344  83 

33 

Winchendon, 

260  42 

2,742  00 

-f-    2,481  58 

APPENDIX   II.— TABLE   E. 


313 


TABLE  E  — Concluded. 


PLAN  II.  —ABOLITION  OF  THE  LOCAL  TAXATION  OF 
SECURITIES  AND  THE  DISTRIBUTION 
OF  THE  PROCEEDS  OF  AN  INHERITANCE  TAX. 

Net  Gain  or  Loss 
to  the  city  or 
town  as  a  result 
of  both  Plans. 

PLAN  III.  —  HABI- 
TATION TAX. 

Loss  to  the  city  or 
town  from  Taxes  as- 
sessed on  Intangible 
Personalty.     Cities, 
1896;  towns,  1895. 

Gain  to  the  city  or 
town  by  the  distribu- 
tion of  $2,500,000 
from  the  proceeds  of  the 
Inheritance  Tax. 

Xet  Gain  or 
Loss  as  a  result 
of  Plan  II. 

Gain  from 
Tax  on  Occupiers 
of  Habitations. 

$6,214  50 

$3,841  37 

-  $2,173  13 

—$12,827  63 

t 

1 

6,023  22 

2,379  29 

3,643  93 

—    5,239  76 

t 

2 

15,929  47 

3,682  92 

-   12,246  55 

-  22,184  26 

t 

3 

285  23 

1,676  04 

4-     1,390  81 

4-     2,273  48 

4 

900  00 

6,633  56 

4-    5,734  96 

4-  11,625  83 

- 

5 

133  98 

644  64 

4-       510  66 

-}-     1,005  89 

- 

6 

621  68 

3,730  98 

4-    3,109  30 

4-    4,052  70 

- 

7 

209  70 

698  60 

-}-       488  90 

4-     1,056  26 

- 

8 

2,024  39 

9,414  46 

4-    7,390  07 

4-  13,584  19 

- 

9 

302  73 

1,098  85 

4-       796  12 

-f     1,309  66 

- 

10 

162  09 

525  28 

4-       363  19 

+       680  69 

- 

11 

168  00 

641  60 

4-       473  60 

4-     1,018  48 

- 

12 

2,628  86 

7,096  43 

4-    4,467  57 

4-    8,395  53 

- 

13 

6  40 

163  20 

-j-        156  80 

4-       381  56 

- 

14 

734  87 

668  79 

66  08 

4-       396  50 

- 

15 

1  08 

309  08 

4-       308  00 

+       557  10 

- 

16 

538  37 

320  39 

217  98 

4-         23  60 

- 

17 

1,629  26 

2,168  38 

4-       539  12 

4-    1,618  30 

- 

18 

1,049  10 

4,138  70 

4-    3,089  60 

-f-    5,260  46 

_ 

19 

212  87 

687  52 

4-       474  65 

4-       518  44 

- 

20 

471  53 

3,817  22 

4-     3,345  69 

4-    5,333  15 

- 

21 

18  07 

273  14 

4-       255  07 

-j-       416  68 

- 

22 

- 

111  31 

4-       111  31 

4-       230  18 

- 

23 

- 

88  32 

4-         88  32 

4-       207  19 

- 

24 

496  28 

4,858  23 

4-     4,361  95 

4-    7,294  84 

- 

25 

100  70 

305  75 

4-       205  05 

+       367  97 

- 

26 

540  38 

1,228  44    4-       688  06 

+     1,655  86 

- 

27 

1,119  00 

5,392  50 

4-    4,273  50 

4-    6,733  91 

- 

28 

1,415  80 

4,089  10 

4-    2,673  30 

4-    2,528  82 

- 

29 

2,285  57 

2,097  40 

188  17 

4-       831  18 

- 

30 

738  44 

779  85 

4-         41  41 

—     1,092  93 

- 

31 

157  50 

390  83 

4-       233  33 

4-       578  16 

- 

32 

738  51 

3,450  28 

-|-     2,711  77 

4-    5,193  35 

— 

33 

t  Th 


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314 


TAXATION   KEPORT. 


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APPENDIX   II.— TABLE   F, 


315 


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APPENDIX  II.  —  TABLE  F. 


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r-H 

fc             ^ 

fc 

'S 

'S   ?        a 
1    |    :  3 

1^0 

1  2-    : 

'p     ca 

a    a" 

O        o3 

^ 

I 

s 

rfl        ^C3         ^ 

ail 

**    5 

D 

8 

| 

1  1  1  1 

K     !M     !H     A 

i  S  1 

||| 

1    1 

£ 

| 

318 


TAXATION   REPORT. 


TABLE   G. 

Distribution  of  the  General  Corporation  Tax  to  the  Several  Cities  and  Towns, 
Showing  the  Amount  of  Tax  Distributed  for  the  Year  1896  to  Each 
City  and  Town  per  Capita  of  the  Population,  Census  of  1895. 


ClTT  OR  TOWN. 

Tax 
Distributed 
per 
Capita. 

CITY  OR  TOWN. 

Tax 
Distributed 
per 
Capita. 

$0.367 

Boston,  ...... 

$1.723 

.384 

Bourne,  ...... 

2.748 

.127 

.181 

Adams,  ...... 

.252 

1.749 

.175 

.011 

Alford,  

.136 

.301 

.348 

1.194 

.383 

.522 

1.476 

.586 

1.265 

.136 

Ashburnham,        .... 

.048 
.439 

Brockton,       
Brookfield,    ..... 

.228 
.362 

Ashfield,        

.012 

Brookline,      ..... 

7.741 

.166 

.074 

Athol  

.236 

Burlington,    ..... 

.203 

Attleborough,         .... 

.205 

(wo 

.847 

IfiO 

1.844 

9fi1 

Carlisle  

.026 

1  177 

Carver,  

.692 
.017 

Barre,    

.382 

.217 

358 

.155 

Bedford 

822 

.337 

.064 

.298 

.001 

.277 

1.887 

.732 

Berkley,         

.253 

Chesterfield,  

.008 

Berlin,   

.054 

.395 

.313 

.128 

Beverly,         ...                . 

2  137 

.000 

Billerica,        .... 

1  697 

.166 

021 

4.142 

Blandford,     

.247 

.226 

Bolton,  

073 

1.688 

APPENDIX   II.  — TABLE   G. 


319 


TABLE  G.  —  Continued. 


CITY  OR  TOWN. 

Tax 
Distributed 
per 
Capita. 

CITY  OR  TOWN. 

Tax 
Distributed 
per 
Capita. 

$0.193 

Gill 

460  fifjq 

Cottage  City,         .... 

.061 

Gloucester 

325 

Cumraington,        .... 

.228 

010 

• 

.090 

3.375 

Grafton,         .        .        .        . 

.251 

Dana,     

.001 

.219 

frrflnvillo 

.OOO 

1.141 

Dedham,        

1.320 

Great  Barrington, 
Greenfield,     

1.483 
1.176 

Deerfielcl,       

.168 

.159 

.603 

.116 

.bl4 

075 

.085 

5.730 

"HaHlpv 

1  on 

.037 

TTalifav 

4.9O 

Dudley,          

.138 

1.738 

Dunstable,     

.674 

.040 

.861 

4.74. 

East  Bridgewater, 

.462 

Hanover,       

1.977 
.069 

East  Longrneadow, 

.009 

.338 

1.580 

.219 

.687 

Eastern,  ...... 

2.379 
260 

Hatfield  

.275 

Haverhill  

.473 

.^4o 

.014 

.1/1 
.035 

Heath,  

.107 

2.718 

Essex,    

.237 

.439 

Everett  

.082 

.468 

Fairhaven      ..... 

691 

Holden,          

.036 

Tall  River 

1Q7 

Holland,         

.000 

5  231 

.240 

Fitchburg 

1  227 

Holyoke,       

.621 

Florida 

000 

10.645 

.033 

Hopkinton,    

.265 

Framin^hani         .        • 

2  807 

.146 

874. 

.153 

239 

Hull,      

.253 

.217 

Huntington,  

TTvrlp  Park 

.069 

KA] 

Gay  Head,     

.000 

Georgetown  

.292 

Ipswich,         

.294 

320 


TAXATION  REPORT. 


TABLE  G.  —  Continued. 


CITY  OK  TOWN. 

Tax 
Distributed 
per 
Capita. 

CITY  OR  TOWN. 

Tax 
Distributed 
per 
Capita. 

$1.948 

Millis,    

$0.136 

Lakeville,      

.828 

Milton,  

7.943 

Lancaster,      

1.516 

Monroe,          

.195 
.961 

Lanesborough,      .... 

.029 
.245 

Montague  

.320 

.150 

Lee,        

.344 

09" 

.024 

.785 

Mount  Washington, 

.000 

.404 

29  687 

.087 

7fi7 

1.990 

Aft  X 

.000 

jNaticK,  ...... 

OOQ 

1.519 

JNeeanam,                       • 

000 

Littleton,        

.493 
2.077 

New  Bedford,        .... 

1.055 

OQ1 

Lowell,  .        .        .        . 

.827 
.835 

New  Marlborough, 

.078 
000 

.135 
" 

97Q 

Lynn,     ...... 

.417 

Newbury,      . 

.966 

.002 

3  029 

TVTalrlpn 

1    R4.1 

Norfolk,         

.160 

nonq 

.375 

Mansfield,     
Marblehead,  
Marion,  

.131 
.700 
.938 
.280 

North  Andover,     .... 
North  Attleborough,     . 
North  Brook  field,  .... 
North  Reading,     .... 

2.111 
.417 
.601 
.048 

Marshfield,    

1.022 

Northampton,       .... 

.644 

TVTachnpp 

000 

Northborough,       .... 

.544 

2.422 

Northbridge  

2.815 

.213 

Northfield  

.760 

.074 

TVTorl-fnrrl 

.611 

1K.A4 

.113 

(\TI 

.401 

.501 

01  1 

.129 

20fi4. 

Merrimac,      
Methuen,       
Middleborough  
Middlefield  
Middleton,     
Milford,         

.138 
.153 
.682 
1.085 
.006 
.288 

Orleans,         ..... 
Otis  
Oxford,  

Palmer  
Paxton,  

.825 
.007 
.604 

.154 
.000 

Millbury  

.155 

Peabody  

.524 

APPENDIX  II.  — TABLE  G. 


321 


TABLE  G.  —  Continued. 


ClTT  OR  TOWN. 

Tax 
Distributed 
per 
Capita. 

CITY  OB  TOWN. 

Tax 
Distributed 
per 
Capita. 

$0.190 

$0.185 

Pembroke,     ..... 

.040 

.010 

Pepperell,      ..... 

.406 

.201 

Peru,      

.001 
.403 

Somerville,    

.324 

.590 

Phillipston,    ..... 

.020 

.004 

Pittsfield,       

.556 

2.554 

Plainfield,      
Plymouth,     
Plympton,     . 

.229 
.817 
.120 

Southbridge,  .        .        .        . 
South  wick,    

1.543 

.297 
.778 

Prescott,        
Princeton,      ..... 

.004 
.663 

Springfield,    
Sterling,         

1.917 
.146 

Provincetown  ,       .... 

.294 

3.133 

.255 

Quincy,  

.554 

1-IOK 

Stow,      

,4oy 
.205 

.116 

Raynham,      

.082 

1.005 

Reading,        
Rehoboth,      

.450 
.032 

Sunderland,  

.043 

Sutton,  

.122 

Revere,  

.505 
.033 

Swampscott,  .        .        . 

4.686 

.592 

Rochester,     .        .    t    . 
Rockland,      

.453 
.357 

704. 

Rockport,      

.112 

.210 

Rowe,    

.011 

.073 

.171 

«77 

Royalston,     

.748 

Tolland,         

.000 

Russell,  
Rutland,        

.037 
.011 

Topsfield,       

.270 

Af>n 

.104 

Salem,    
Salisbury,      ..... 

.918 
.065 

Tyngsborough,      .... 

.805 
.080 

Sandisfield  
Sandwich,      ..... 

.062 
.451 

.353 

Saugus,  

.047 

.349 

Savoy  
Scituate          ..... 

.001 

.774 

Wakefield  

.4ie 

Seekonk         ..... 

.024 

Wales,   

.000 

1  168 

.220 

Sheffield         .        . 

.319 

.653 

.247 

.593 

.121 

Wareham,     

.863 

Shirley,  

.101 

Warren,         

.470 

322 


TAXATION  REPORT. 


TABLE  G.  — Concluded. 


CITY  OR  TOWN. 


Tax 
Distributed 

per 
Capita. 


CITY  OK  TOWN. 


Tax 

Distributed 

per 
Capita. 


Warwick,      . 
Washington, . 
Watertown,  . 
Wayland, 
Webster, 
Wellesley,     . 
Wellfleet, 
Wendell, 
Wenham, 
West  Boylston,     . 
West  Bridgewater, 
West  Brookfield,  . 
West  Newbury,     . 
West  Springfield,  . 
West  Stockbridge, 
West  Tisbury, 
Westborough, 
Westfield,      . 
Westford, 
Westhampton, 


$0.103 

.000 

1.028 

1.034 

1.299 

2.300 

1.978 

.000 

.350 

.403 

.273 

.344 

.061 

.676 

.201 

.153 

.297 

.738 

.980 

.046 


Westminster $0.372 

Western,.        .        .        .        .        .        8.661 

Westport, 372 

Wey  mouth 288 

Whately 010 

Whitman, 233 

Wilbraham, 518 

Wllliamsburg, 047 

Williamstown, 078 

Wilmington 003 

Winchendon, 058 

Winchester,    .        .        .        .        .        1.196 

Windsor 000 

Winthrop 394 

Woburn, 369 

Worcester, 1.342 

Worthington, 036 

Wrentham, 249 

Yarmouth 1.945 


YC  35632 


£3083 


J8Q7 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


